U.S. Legislative Issues

According to estimates released by the U.S. Department of Transportation’s Federal Highway Administration (FHWA), Americans drove 221.1 billion miles in February 2015, a 2.8 percent increase over last year and the second-most ever driven in February. This also marks the nation’s twelfth consecutive month of increased growth, as measured by vehicle-miles traveled. Last year, Americans drove 3.02 trillion miles in 2014, up 1.7 percent over 2013 and the highest number driven since 2007. At the current spike in driving, Americans are on pace this year to break the all-time record.

These numbers are consistent with trends identified in Transportation Secretary Anthony Foxx’s "Beyond Traffic" report, which projects a 43 percent increase in commercial truck shipments and population growth of seventy million by 2045. "Americans are driving their cars at near-record levels, and being stuck in traffic is costing drivers an average of nearly five days a year," said Foxx, who is currently pitching a big jump in highway spending as part of a six-year Highway Trust Fund proposal.



In 2013, lawmakers in Virginia became the first state to replace its conventional cents-per-gallon fuel tax with a wholesale tax. In Virginia, this translated to a 3.5 percent wholesale tax on gasoline and a 6 percent tax on diesel in place of its statewide 17.5 cents-per-gallon tax paid for by users at the pump. The transition did not eliminate the additional 2.1 percent gasoline sales tax imposed on certain localities, known as the Motor Vehicle Fuel Sales Tax (MVFST). It did, however, move the point of taxation from the retail sale to the wholesale sale and repealed the statute providing for MVFST refunds for fleets purchasing fuel for government purposes from a retail site.

This change has not been welcomed by government fleets operating in Virginia, who were previously exempt from the 2.1 percent excise tax. Federal law provides a fuel excise tax exemption for the sale of fuel removed from a taxable fuel terminal if used for exclusive government purposes. Now, only bulk fuel that is delivered to government agencies and strictly used for conducting government business will continue to be exempt.

As Congress looks for ways to shore up the Highway Trust Fund, some lawmakers have suggested the widespread adoption of Virginia’s recently enacted transportation funding scheme to ensure revenue keeps pace with economic growth and inflation. Such a move would mean a widespread shift in the point of taxation for fuel taxes – a change that could heavily impact government fleets receiving refunds for excise taxes paid at the pump.



Severe storms can often result in broad power outages, with significant economic and human costs. In the aftermath of a storm, electric utilities mobilize vast resources to restore electric services to consumers. This includes dispatching vehicle fleets with utility-service teams and support contractors to the area of the country hit by the storm. For example, utility companies from throughout the country dispatched crews and vehicles to the Mid-Atlantic area in support of the restoration efforts spurred by Super Storm Sandy. The timely restoration of power is thwarted, however, when electric utility fleets face delays due to conflicting state requirements on issues such as hours of service, fuel taxes, toll lanes, registration, clearance through weigh stations and licensing.

To address this critical issue, the Edison Electric Institute (EEI) and NAFA are convening a meeting of stakeholders on May 18, 2015 in Washington, D.C. to identify solutions and options for reaching a consensus on a process for expediting the movement of electric utility service fleet vehicles for storm restoration.

This meeting and the potential longer-term solutions that will be discussed are designed to complement the shorter- to mid-term solutions already developed by the Multi-state Fleet Response Working Group. NAFA members seeking additional information are encouraged to contact NAFA’s U.S. Legislative Counsel, Pat O’Connor, at poconnor@nafa.org.

 

The Internal Revenue Code limits the amount of depreciation that a business taxpayer can take on passenger vehicles in its fleet. Since 1984, fleet automobiles, vans, and trucks have been the only business investment where full depreciation is restricted. Further, most fleet passenger vehicles are not able to take full advantage of the additional first year depreciation deduction allowed under Section 168(k).

In January 2015, Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) announced the launch of five bipartisan Finance Committee Tax Working Groups to spur congressional comprehensive tax reform efforts in the new Congress.  The groups were specifically tasked with analyzing current tax law and examining policy trade-offs and available reform options within the group’s designated topic areas.

In March 2015, Senators Hatch and Wyden directed the working groups to solicit public input from interested members and stakeholders on how best to overhaul the nation’s tax code. In response, NAFA sent a letter to members of the Business Income Tax Working Group to request that it consider revising the depreciation requirements for automobiles, trucks and vans owned or leased by fleets.

The working groups are hoping to finalize their legislative recommendations based on stakeholder submissions by the end of May.