Statements on Introduced Bills and Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - January 26, 2005)

By Mr. ENSIGN:

S. 181. A bill to amend the Internal Revenue Code of 1986 to allow a credit against income tax for taxpayers owning certain commercial power takeoff vehicles; to the Committee on Finance.

Mr. ENSIGN. Mr. President, I rise today to offer legislation to correct an inequity with the United States Tax Code that affects thousands of taxpayers every year. The bill I am offering is the Fuel Tax Equalization Credit for Substantial Power Takeoff Vehicles Act which will correct an injustice for owners of ready mixed concrete and sanitation trucks.

Our Tax Code imposes a Federal tax on fuel sold for use in highway vehicles. This makes sense because vehicles that use our roads cause wear and tear. The money raised from the fuel tax goes directly into the Highway Trust Fund and is used for road repair and maintenance. The Code provides fuel tax exemption for ``off highway'' use so that fuel used by non-highway vehicles is not taxed. The principle is simple. Fuel used to move vehicles on our roads is taxed; fuel used for ``off-road'' purposes is not.

Mixed concrete and sanitation trucks are ``dual-use'' vehicles. In addition to consuming fuel for roadway travel, they use fuel for a secondary purpose such as turning the mixer drum or lifting a dumpster and compacting trash. This is known as a ``Power Takeoff Function.'' In the past, this function was performed by a second fuel-driven engine. But times have changed. Today, sanitation and cement trucks are more efficient and use one engine for both tasks. Today's vehicles create the situation where technology is in the fast lane but our tax system lags behind in the slow lane.

The environment benefits with the use of one engine instead of two as a result of decreased fuel use and exhaust emissions. Using one engine reduces the truck's weight which means these trucks can haul more cargo without violating weight restrictions. This decreases the number of trips these trucks must take which results in less wear and tear on the roads.

Until recently, owners of dual-use vehicles would estimate the amount of fuel taxes they paid for fuel related to off-road use and would claim a tax credit for that amount. The Tax Code does not recognize ``dual-use'' vehicles but recent IRS regulations support the idea that the fuel tax did not apply to fuel used for non-highway purposes. Despite the regulations, the IRS argued in a recent tax court case that estimating fuel consumption was too difficult to administer. In other words, the IRS dismissed its own regulations. Unfortunately for taxpayers who own dual use vehicles, the tax court agreed with the IRS's position. This decision has had the effect of penalizing efficiency, conservation and good environmental practices.

Mr. President, by establishing an annual $250.00 per vehicle tax credit my bill resolves this inequity. This legislation should not be seen as creating a new tax break. It restores tax fairness to owners of dual-use vehicles without resorting to an elaborate fuel measurement scheme that would create administrative difficulties. The amount of the tax credit is less than the estimated amount of fuel taxes paid for non-highway purposes for these vehicles. In order to receive this credit, a vehicle would have to be registered, licensed and insured in the vehicle owner's respective State. This is a measure that will simply restore fairness to a situation involving the fuel tax where Congress never intended the tax to apply in the first place.

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