Freshman Sen. Paul Bailey, R-Sparta, who runs a trucking company, has proposed a way to have out-of-state trucking companies pay more taxes for their travels in Tennessee, boosting state revenue for the faltering road construction fund, reports the Chattanooga Times-Free Press.
Senate Speaker Ron Ramsey, R-Blountville, cited the truck weight fee proposal last week as he told reporters he is seeking a “very comprehensive” approach to generating more revenue for transportation.
…Bailey said in an interview that “when I first heard talk of a fuel tax increase, I took out figures from our company, and compared what we were paying in Tennessee versus other states.”
He said he “noticed that not only was our state significantly lower, but that surrounding states had levies on weight/distance and fuel surcharges that we don’t collect in Tennessee. So in effect, Tennessee trucking companies are paying extra fees in other states that out-of-state firms are not paying here.”
Tennessee motor carriers “pay a tremendous amount of fuel taxes already,” Bailey said, noting his own medium-sized firm pays about $300,000 per year.
“So, what this plan does is provide for the capture of a revenue stream from out-of-state trucking companies that enjoy our good highway infrastructure without adding a tax burden on the citizens of Tennessee,” Bailey said.
Kentucky, New Mexico, New York and Oregon already have weight/distance fees, Bailey said. All truckers pay the fees, the senator noted, but home-based firms are able to deduct the fees from business taxes, leaving out-of-state truckers carrying the load.
Bailey said his proposal would do the same in the Volunteer State. Tennessee-based firms would be able to deduct the weight/distance fees from their state franchise and excise taxes under his plan, Bailey said.
“It will also provide additional revenue for city and county road departments,” Bailey said.
Using rates identical to Kentucky’s, Bailey estimates the weight/distance fee could raise $103.6 million. Tennessee-based companies could deduct about $25.34 million, leaving the state with a net gain of $78.2 million.
Meanwhile, three other states — Kentucky, Virginia and Indiana — utilize fuel charges impacting truckers. Again, in-state firms can deduct those from their business taxes in those states.
Implementing a 5-to-13-cent per gallon surcharge would net Tennessee an additional $23.76 million to $61.79 million annually with Tennessee-based firms’ deductions taken into account, according to Bailey’s estimates.
He estimated that about 60 percent of the nation’s trucking traffic comes through Tennessee, which has the 400-mile-long Interstate 40, a major national east-west corridor, and Interstate 75, a major north-south artery in the eastern U.S. that runs through Chattanooga and Knoxville.