[Congressional Record Volume 145, Number 70 (Friday, May 14, 1999)]
[Senate]
[Pages S5373-S5377]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CHAFEE:
  S. 1056. A bill to amend the Internal Revenue Code of 1986 to improve 
tax equity for the Highway Trust Fund and to reduce the number of 
separate taxes deposited into the Highway Trust fund, and for other 
purposes; to the Committee on Finance.


           highway tax equity and simplification act of 1999

  Mr. CHAFEE. Mr. President, I am introducing today, the Highway Tax 
Equity and Simplification Act of 1999. This bill improves the equity 
among taxpayers paying into the Highway Trust Fund. Under current law, 
some users pay too much into the trust fund relative to the costs they 
impose on the nation's highway system, while other pay too little. This 
proposal more fairly apportions the tax burden to those who impose the 
greatest costs to our highway infrastructure.
  In my statement today, I plan to briefly describe:
  (1) Who pays too much and too little?
  (2) Why the current tax structure fails?
  (3) Why the current tax structure can't be just tinkered with and 
therefore needs radical change?
  (4) A description of the plan I am introducing today.
  Who pays too much and who pays too little?
  If we look at the U.S. Department of Transportation's (DOT) latest 
cost allocation study of the highway system, it is clear that the 
current system does not fairly apportion the relative burden of taxes 
paid compared to costs imposed. At this time, I will submit for the 
Record a table which summarizes the relative burden among users based 
on analysis provided by the U.S. Department of Transportation.
  As this table shows, some users are paying 150 percent of their share 
while some of the heaviest trucks are paying as low as 40 percent of 
their share. This is simply unfair and needs to be changed.
  Another way to look at the unfairness of the current situation is to 
look at the per vehicle subsidies for heavy trucks that the U.S. DOT 
provided in their latest report to the Congress. In determining these 
subsidies, DOT simply subtracted what these vehicles should have paid 
in taxes, based on the costs they impose, from the amount of taxes they 
do pay. These subsidies are thousands of dollars per vehicle annually, 
with several above $5,000 per vehicle. At the end of my statement, I 
would like to enter into the Record a table showing a few examples of 
the subsidies summarized in the DOT report.

  One of the reasons that the current tax structure fails so miserably 
at properly allocated costs is because neither the Congress nor the 
U.S. DOT has looked seriously at this issue for a very long time. The 
last significant cost allocation study was completed in 1982, more than 
17 years ago. Without up-to-date analysis, it has been virtually 
impossible for the Congress to address this significant problem. I want 
to commend Secretary Slater for taking the initiative to have his 
Department provide an up-to-date analysis to the Congress. It is my 
understanding that DOT plans on keeping its analytical capability 
current regarding cost allocation so that the Congress doesn't have to 
wait every 17 years to address this issue.
  Lack of good information is one of the reasons we have this unfair 
situation. The other reason deals more directly with basic engineering 
concepts. Highway pavement wear and tear imposed by a vehicle is 
related to two primary factors: how much you drive on the road and the 
weight of the vehicle.
  Now, why is the weight of a vehicle so important?
  It is important because pavement damage increases dramatically 
(actually exponentially) with weight. At this time, I will submit for 
the record information which shows the relationship between weight and 
pavement damage.
  This chart shows that on a rural Interstate Highway, a single 100,000 
pound standard tractor-trailer wears the equivalent of more than 1,700 
automobiles. But, that truck certainly does not pay 1,700 times the 
amount of taxes.
  On a rural arterial road, not built to Interstate standards, this 
dynamic is even worse, wearing the equivalent of 3,500 cars.
  The problem with the current tax system is that it does not attempt 
to recover from trucks the dramatic pavement damage costs that are 
incurred as the weight of these vehicles increases. Until we address 
this fundamental principle, we will not have an equitable tax system.
  Now, let's briefly look at each of the current taxes and how well 
they contribute to tax equity.
  Excise Tax--Under current law, we impose a 12 percent excise tax on 
the purchase of new trucks. This tax raises more than $2 billion 
annually. However, it has no relationship to either road usage or 
pavement damage and therefore does not contribute to tax equity.
  Tire Tax--the exist tax imposed on tires is moderately helpful for 
improving tax equity because it varies by miles driven and, to some 
extend by weight. However, it raises a relatively small amount of money 
(about $400 million per year or less than 5 percent of truck taxes) and 
therefore has a small effect on cost allocation.
  Diesel Tax--currently, diesel fuel is taxed at 24 cents per gallon. 
Although diesel taxes paid do vary by mileage, diesel taxes do a poor 
job of recovering pavement damage related to the weight of the vehicle. 
When the weight of a truck is increased, fuel use increases only 
marginally. However, the pavement damage imposed by that same vehicle 
goes up exponentially. Increasing diesel tax rates does not resolve 
this fundamental problem and actually exacerbates the unfairness of the 
current system. I would submit for the Record information which 
illustrates the problem.

  Heavy Vehicle Use Tax--this tax sounds like it might be the right 
place to address concerns related to weight, but it also falls well 
short of the mark. Even the name is deceiving. First, this tax does not 
vary by use. A truck that travels 10,000 miles annually and another 
that travels 100,000 miles pay the same tax. Secondly, although the 
name implies it applies to Heavy Vehicles, this tax is capped at 75,000 
pounds, the point at which pavement damage goes up dramatically. I will 
also submit information which compares pavement damage and the Heavy 
Vehicle Use tax.
  In summary, our review of the current taxes led me to conclude that 
they do a poor job of aligning taxes paid with road damage. In other 
words, they just can't get the job done. We need a new mechanism.
  The bill I introduce today eliminates 3 of the separate taxes and 
replaces them with a straightforward tax that more fairly distributes 
the tax burden among highway users.
  Specifically, the bill eliminates the tire tax, the 12 percent excise 
tax on new trucks, and the Heavy Vehicle Use Tax. It also eliminates 
the so-called ``diesel differential,'' the additional 6 cents per 
gallon imposed on diesel fuel compared to gasoline, which is taxed at 
18.33 cents per gallon.
  To replace the lost revenue from these repeals and tax reductions, 
and to improve the equity of the truck taxes paid, the bill establishes 
a new user fee, an axle-weight distance tax. This new tax varies based 
on the truck's axle-weight loads and the distance traveled, the exact 
same concepts that affect pavement damage.

[[Page S5374]]

  The bill collects the same amount of tax revenue from trucks overall 
as current law, about $11 billion annually.
  Overall, there are more winners than losers under this bill. The vast 
majority of trucks--more than 5.9 million--will see a tax reduction. 
This compares to roughly 1.5 million who will see an increase.
  The bill also reduces double taxation on toll roads by allowing a 
credit against the axle-weight distance tax for travel on a toll 
facility such as the Oklahoma or Florida Turnpikes.
  This new axle-weight tax has long been recognized in the 
transportation community as the best way to tax trucks. As an example, 
the American Association of State Highway Transportation Officials, the 
association representing State Transportation Departments, policy 
resolution on this matter finds:

       . . . truck taxes based upon a combination of the weight of 
     vehicles and the distance they travel more equitably 
     distribute financing responsibility proportional to costs 
     imposed on the system than other tax alternatives.

  In fact, AASHTO policy calls for substituting a weight-distance tax 
for the heavy vehicle use tax and all other federal user fees on trucks 
except for a federal fuel tax--a perfect description of the proposal we 
are introducing today.
  Now, I would like to briefly touch upon a few areas where I expect 
opponents of this effort may focus.
  Some may argue that this is an anti-truck proposal and will impose 
new costs on consumers. My response to this assertion is that overall 
truck taxes are held constant and most of the trucking industry 
benefits from this proposal. Unfortunately, this benefit is at the 
expense of the portion of the industry that is doing damage to our 
nation's roadways without paying for it, and they will probably fight 
hard to keep their undeserved subsidies. The trick for the rest of the 
industry and for all roadway users is to recognize that virtually all 
of these arguments are attempts to distract us from the real issue--
should heavy trucks pay their fair share?
  Heavy truck operators will try to argue about all sorts of ancillary 
items to distracts us from this fundamental issue. They will argue 
about tax evasion, administrative burden, additional record keeping and 
the like. Anything but the core issue of whether these trucks should 
pay their fair share.

  As the Congress considers, this issue, I hope we can remain focused 
on this fundamental question and not be distracted by arguments that 
are not intended to squash efforts to address the unfair system we have 
today.
  I urge my colleagues to support this effort.
  Mr. President, I ask unanimous consent that the text of the bill, a 
summary of the legislation, and the materials previously cited be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1056

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Highway Tax Equity and 
     Simplification Act of 1999''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) Congress should enact legislation to correct the 
     distribution of the tax burden among the various classes of 
     persons using the Federal-aid highways, or otherwise deriving 
     benefits from such highways;
       (2) the most recent highway cost allocation study by the 
     Department of Transportation found that owners of heavy 
     trucks significantly underpay Federal highway user fees 
     relative to the costs such vehicles impose on such highways, 
     while owners of lighter trucks and cars overpay such fees;
       (3) pavement wear and tear is directly correlated with 
     axle-weight loads and distance traveled, and to the maximum 
     extent possible, Federal highway user fees should be 
     structured based on this fundamental fact of use and 
     resulting cost;
       (4) the current Federal highway user fee structure is not 
     based on this fundamental fact of use and resulting cost; to 
     the contrary--
       (A) the 12-percent excise tax applied to the sales of new 
     trucks has no significant relationship to pavement damage or 
     road use and does the poorest job of improving tax equity,
       (B) the heavy vehicle use tax does not equitably apply to 
     heavy trucks (such tax is capped with respect to trucks 
     weighing over 75,000 pounds) and does not vary by annual 
     mileage, thus 2 heavy trucks traveling 10,000 miles and 
     100,000 miles, respectively, pay the same heavy vehicle use 
     tax, and
       (C) diesel fuel taxes do a poor job recovering pavement 
     costs because such taxes only increase marginally with weight 
     increases while pavement damage increases exponentially with 
     weight, and increasing the rates for diesel fuel will not 
     resolve this fundamental flaw;
       (5) truck taxes based on a combination of the weight of 
     vehicles and the distance such trucks travel provide greater 
     equity than a tax based on either of these 2 factors alone; 
     and
       (6) the States generally have in place mechanisms for 
     verifying the registered weight of trucks and the miles such 
     trucks travel.
       (b) Purposes.--The purposes of this Act are--
       (1) to replace the heavy vehicle use tax and all other 
     Federal highway user charges (except fuel taxes) with a 
     Federal weight-distance tax which is designed to yield at 
     least equal revenues for highway purposes and to provide 
     equity among highway users; and
       (2) to provide that such a tax be administered in 
     cooperation with the States.

     SEC. 3. REPEAL AND REDUCTION OF CERTAIN HIGHWAY TRUST FUND 
                   TAXES.

       (a) Repeal of Heavy Vehicle Use Tax.--Subchapter D of 
     chapter 36 of the Internal Revenue Code of 1986 (relating to 
     tax on use of certain vehicles) is repealed.
       (b) Repeal of Tax on Heavy Trucks and Trailers Sold at 
     Retail.--Section 4051(c) of the Internal Revenue Code of 1986 
     (relating to termination) is amended by striking ``October 1, 
     2005'' and inserting ``July 1, 2000''.
       (c) Repeal of Tax on Tires.--Section 4071(d) of the 
     Internal Revenue Code of 1986 (relating to termination) is 
     amended by striking ``October 1, 2005'' and inserting ``July 
     1, 2000''.
       (d) Reduction of Tax Rate on Diesel Fuel To Equal Rate on 
     Gasoline.--Section 4081(a)(2)((A)(iii) of the Internal 
     Revenue Code of 1986 (relating to rates of tax) is amended by 
     striking ``24.3 cents'' and inserting ``18.3 cents''.
       (e) Conforming Amendments.--
       (1) Section 4221(a) of the Internal Revenue Code of 1986 
     (relating to certain tax-free sales) is amended by striking 
     ``October 1, 2005'' and inserting ``July 1, 2000''.
       (2) Subchapter A of chapter 62 of such Code (relating to 
     place and due date for payment of tax) is amended by striking 
     section 6156.
       (3) The table of sections for subchapter A of chapter 62 of 
     such Code is amended by striking the item relating to section 
     6156.
       (4) Section 9503(b)(1) of such Code (relating to transfer 
     to Highway Trust Fund of amounts equivalent to certain taxes) 
     is amended by striking subparagraphs (B) and (C) and by 
     redesignating subparagraphs (D) and (E) as subparagraphs (B) 
     and (C), respectively

     SEC. 4. TAX ON USE OF CERTAIN VEHICLES BASED ON WEIGHT-
                   DISTANCE RATE.

       (a) In General.--Chapter 36 of the Internal Revenue Code of 
     1986, as amended by section 3(a), is amended by adding at the 
     end the following:

             ``Subchapter D--Tax on Use of Certain Vehicles

``Sec. 4481. Imposition of tax.
``Sec. 4482. Definitions.
``Sec. 4483. Exemptions.
``Sec. 4484. Cross references.

     ``SEC. 4481. IMPOSITION OF TAX.

       ``(a) Imposition of Tax.--
       ``(1) In general.--A tax is hereby imposed on the use of 
     any highway motor vehicle (either in a single unit or 
     combination configuration) which, together with the 
     semitrailers and trailers customarily used in connection with 
     highway vehicles of the same type as such highway motor 
     vehicle, has a taxable gross weight of over 25,000 pounds at 
     the rate of--
       ``(A) the cents per mile rate specified in the table 
     contained in paragraph (2), or
       ``(B) in the case of a highway motor vehicle with a taxable 
     gross weight in excess of the weight for the highest rate 
     specified in such table for such vehicle, the cents per mile 
     rate specified in paragraph (3).
       ``(2) Rate specified in table.--The table contained in this 
     paragraph is as follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Cents Per Mile
 Taxable Gross Weight in Thousands  --------------------------------------------------------------------------------------------------------------------
             of Pounds                  2-axle       3-axle      4-axle+       3-axle       4-axle       5-axle       6-axle       7-axle      8-axle+
                                     single unit  single unit  single unit  combination  combination  combination  combination  combination  combination
--------------------------------------------------------------------------------------------------------------------------------------------------------
Over 25 to 30......................         0.50         0.00         0.00         0.00         0.00         0.00         0.00         0.00         0.00
Over 30 to 35......................         1.00         0.25         0.00         0.00         0.00         0.00         0.00         0.00         0.00
Over 35 to 40......................         3.00         0.50         0.00         0.50         0.00         0.00         0.00         0.00         0.00

[[Page S5375]]

 
Over 40 to 45......................         5.00         1.50         0.50         1.00         0.00         0.00         0.00         0.00         0.00
Over 45 to 50......................         8.00         3.00         1.00         1.50         0.25         0.00         0.00         0.00         0.00
Over 50 to 55......................        12.00         6.00         2.00         2.50         0.50         0.25         0.00         0.00         0.00
Over 55 to 60......................        21.00        10.00         4.00         3.50         1.00         0.50         0.00         0.00         0.00
Over 60 to 65......................        30.00        17.00         7.00         5.00         2.50         1.00         0.25         0.00         0.00
Over 65 to 70......................  ...........        25.00        10.00         7.50         4.00         2.00         0.50         0.00         0.00
Over 70 to 75......................  ...........        33.00        14.00        11.00         5.50         3.00         1.25         0.00         0.00
Over 75 to 80......................  ...........        41.00        19.00        17.00         7.50         3.75         2.00         0.00         0.00
Over 80 to 85......................  ...........        50.00        24.00        25.00        13.00         7.00         4.00         0.50         0.00
Over 85 to 90......................  ...........  ...........        30.00  ...........        19.00        11.00         6.00         1.00         0.00
Over 90 to 95......................  ...........  ...........        36.00  ...........        25.00        15.00         8.50         1.50         0.25
Over 95 to 100.....................  ...........  ...........        42.00  ...........  ...........        20.00        11.00         2.00         0.50
Over 100 to 105....................  ...........  ...........        50.00  ...........  ...........        25.00        14.00         3.50         1.00
Over 105 to 110....................  ...........  ...........  ...........  ...........  ...........        30.00        17.00         5.00         2.00
Over 110 to 115....................  ...........  ...........  ...........  ...........  ...........        35.00        20.00         7.00         3.00
Over 115 to 120....................  ...........  ...........  ...........  ...........  ...........  ...........        23.00         9.00         4.00
Over 120 to 125....................  ...........  ...........  ...........  ...........  ...........  ...........        26.00        11.00         6.00
Over 125 to 130....................  ...........  ...........  ...........  ...........  ...........  ...........        29.00        13.00         8.00
Over 130 to 135....................  ...........  ...........  ...........  ...........  ...........  ...........        32.00        15.00        10.00
Over 135 to 140....................  ...........  ...........  ...........  ...........  ...........  ...........        35.00        17.00        12.00
Over 140 to 145....................  ...........  ...........  ...........  ...........  ...........  ...........  ...........        19.00        14.00
Over 145 to 150....................  ...........  ...........  ...........  ...........  ...........  ...........  ...........        21.00        16.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

       ``(3) Rate specified in paragraph.--The cents per mile rate 
     specified in this paragraph is as follows:
       ``(A) In the case of any single unit highway motor vehicle 
     with 2 or more axles or any combination highway motor vehicle 
     with 3 or 4 axles, the highest rate specified in the table 
     contained in paragraph (2) for such vehicle, plus 10 cents 
     per mile for each 5000 pounds (or fraction thereof) in excess 
     of the taxable gross weight for such highest rate.
       ``(B) In the case of any combination highway motor vehicle 
     with 5 or 6 axles, the highest rate specified in the table 
     contained in paragraph (2) for such vehicle, plus 5 cents per 
     mile for each 5000 pounds (or fraction thereof) in excess of 
     the taxable gross weight for such highest rate.
       ``(C) In the case of any combination highway motor vehicle 
     with 7 or more axles, the highest rate specified in the table 
     contained in paragraph (2) for such vehicle, plus 2 cents per 
     mile for each 5000 pounds (or fraction thereof) in excess of 
     the taxable gross weight for such highest rate.
       ``(b) Determination of Number of Axles.--For purposes of 
     this section--
       ``(1) In general.--The total number of axles with respect 
     to any highway motor vehicle shall be determined without 
     regard to any variable load suspension axle, except if such 
     axle meets the requirements of paragraph (2).
       ``(2) Eligibility requirements.--The requirements of this 
     paragraph are as follows:
       ``(A) All controls with respect to the variable load 
     suspension axle are located outside of and inaccessible from 
     the driver's compartment of the highway motor vehicle.
       ``(B) The gross axle weight rating of all such axles with 
     respect to the highway motor vehicle shall conform to the 
     greater of--
       ``(i) the expected loading of the suspension of such 
     vehicle, or
       ``(ii) 9,000 pounds.
       ``(3) Variable load suspension axle defined.--The term 
     `variable load suspension axle' means an axle upon which a 
     load may be varied voluntarily while the highway motor 
     vehicle is enroute, whether by air, hydraulic, mechanical, or 
     any combination of such means.
       ``(4) Termination of exception.--The exception under 
     paragraph (1) shall not apply after June 30, 2004.
       ``(c) Determination of Miles.--
       ``(1) Use of certain toll facilities excluded.--For 
     purposes of this section, the number of miles any highway 
     motor vehicle is used shall be determined without regard to 
     the miles involved in the use of a facility described in 
     paragraph (2).
       ``(2) Toll facility.--A facility is described in this 
     paragraph if such facility is a highway, bridge, or tunnel, 
     the use of which is subject to a toll.
       ``(d) By Whom Paid.--The tax imposed by this section shall 
     be paid by the person in whose name the highway motor vehicle 
     is, or is required to be, registered under the law of the 
     State or contiguous foreign country in which such vehicle is, 
     or is required to be, registered, or, in case the highway 
     motor vehicle is owned by the United States, by the agency or 
     instrumentality of the United States operating such vehicle.
       ``(e) Time for Paying Tax.--The time for paying the tax 
     imposed by subsection (a) shall be the time prescribed by the 
     Secretary by regulations.
       ``(f) Period Tax in Effect.--The tax imposed by this 
     section shall apply only to use before October 1, 2005.

     ``SEC. 4482. DEFINITIONS.

       ``(a) Highway Motor Vehicle.--For purposes of this 
     subchapter, the term `highway motor vehicle' means any motor 
     vehicle which is a highway vehicle.
       ``(b) Taxable Gross Weight.--For purposes of this 
     subchapter--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `taxable gross weight' means, when used with respect to 
     any highway motor vehicle, the maximum weight at which the 
     highway motor vehicle is legally authorized to operate under 
     the laws of the State in which it is registered.
       ``(2) Special permits.--If a State allows a highway motor 
     vehicle to be operated for any period at a maximum weight 
     which is greater than the weight determined under paragraph 
     (1), its taxable gross weight for such period shall be such 
     greater weight.
       ``(c) Other Definitions and Special Rule.--For purposes of 
     this subchapter--
       ``(1) State.--The term `State' means a State and the 
     District of Columbia.
       ``(2) Use.--The term `use' means use in the United States 
     on the public highways.

     ``SEC. 4483. EXEMPTIONS.

       ``(a) State and Local Government Exemption.--Under 
     regulations prescribed by the Secretary, no tax shall be 
     imposed by section 4481 on the use of any highway motor 
     vehicle by any State or any political subdivision of a State.
       ``(b) Exemption for United States.--The Secretary may 
     authorize exemption from the tax imposed by section 4481 as 
     to the use by the United States of any particular highway 
     motor vehicle, or class of highway motor vehicles, if the 
     Secretary determines that the imposition of such tax with 
     respect to such use will cause substantial burden or expense 
     which can be avoided by granting tax exemption and that full 
     benefit of such exemption, if granted, will accrue to the 
     United States.
       ``(c) Certain Transit-Type Buses.--Under regulations 
     prescribed by the Secretary, no tax shall be imposed by 
     section 4481 on the use of any bus which is of the transit 
     type (rather than of the intercity type) by a person who, for 
     the last 3 months of the preceding year (or for such other 
     period as the Secretary may by regulations prescribe for 
     purposes of this subsection), met the 60-percent passenger 
     fare revenue test set forth in section 6421(b)(2) (as in 
     effect on the day before the day of the enactment of the 
     Energy Tax Act of 1978) as applied to the period prescribed 
     for the purposes of this subsection.
       ``(d) Termination of Exemptions.--Subsections (a) and (c) 
     shall not apply on and after October 1, 2005.

     ``SEC. 4484. CROSS REFERENCES.

       ``(1) For penalties and administrative provisions 
     applicable to this subchapter, see subtitle F.
       ``(2) For exemption for uses by Indian tribal governments 
     (or their subdivisions), see section 7871.''
       (b) Administration of Tax.--To the maximum extent possible, 
     the Secretary of the Treasury shall administer the tax 
     imposed by section 4481 of the Internal Revenue Code of 1986 
     (as added by this section)--
       (1) in cooperation with the States and in coordination with 
     State administrative and reporting mechanisms, and
       (2) through the use of the International Registration Plan 
     and the International Fuel Tax Agreement.

     SEC. 5. COOPERATIVE TAX EVASION EFFORTS.

       The Secretary of Transportation is authorized to use funds 
     authorized for expenditure under section 143 of title 23, 
     United States Code, and administrative funds deducted under 
     104(a) of such title 23, to develop automated data processing 
     tools and other tools or processes to reduce evasion of the 
     tax imposed by section 4481 of the Internal Revenue Code of 
     1986 (as added by section 4(a)). These funds may be allocated 
     to the Internal Revenue Service, States, or other entities.

[[Page S5376]]

     SEC. 6. STUDY.

       (a) In General.--The Secretary of Transportation, in 
     consultation with the Secretary of the Treasury, shall 
     conduct a study of--
       (1) the tax equity of the various Federal taxes deposited 
     into the Highway Trust Fund,
       (2) any modifications to the tax rates specified in section 
     4481 of the Internal Revenue Code of 1986 (as added by 
     section 4(a)) to improve tax equity, and
       (3) the administration and enforcement under subsection (e) 
     of the tax imposed by section 4481 of the Internal Revenue 
     Code of 1986 (as so added).
       (b) Report.--Not later than July 1, 2002, and July 1 of 
     every fourth year thereafter, the Secretary of Transportation 
     shall submit to the Committee on Ways and Means of the House 
     of Representatives and the Committee on Finance of the Senate 
     a report on the study conducted under subsection (a) together 
     with--
       (1) recommended tax rate schedules developed under 
     subsection (a)(2), and
       (2) such recommendations as the Secretary may deem 
     advisable to make the administration and enforcement 
     described in subsection (a)(3) more equitable.

     SEC. 7. EFFECTIVE DATE AND FLOOR STOCK REFUNDS.

       (a) Effective Date.--The amendments made by this Act shall 
     take effect on July 1, 2000.
       (b) Floor Stock Refunds.--
       (1) In general.--If--
       (A) before July 1, 2000, tax has been imposed under section 
     4071 or 4081 of the Internal Revenue Code of 1986 on any 
     article, and
       (B) on such date such article is held by a dealer and has 
     not been used and is intended for sale,

     there shall be credited or refunded (without interest) to the 
     person who paid such tax (hereafter in this subsection 
     referred to as the ``taxpayer'') an amount equal to the 
     excess of the tax paid by the taxpayer over the amount of 
     such tax which would be imposed on such article had the 
     taxable event occurred on such date.
       (2) Time for filing claims.--No credit or refund shall be 
     allowed or made under this subsection unless--
       (A) claim therefore is filed with the Secretary of the 
     Treasury before January 1, 2001, and
       (B) in any case where an article is held by a dealer (other 
     than the taxpayer) on July 1, 2000--
       (i) the dealer submits a request for refund or credit to 
     the taxpayer before October 1, 2000, and
       (ii) the taxpayer has repaid or agreed to repay the amount 
     so claimed to such dealer or has obtained the written consent 
     of such dealer to the allowance of the credit or the making 
     of the refund.
       (3) Exception for articles held in retail stocks.--No 
     credit or refund shall be allowed under this subsection with 
     respect to any article in retail stocks held at the place 
     where intended to be sold at retail.
       (4) Definitions.--For purposes of this subsection, the 
     terms ``dealer'' and ``held by a dealer'' have the respective 
     meanings given to such terms by section 6412 of such Code; 
     except that the term ``dealer'' includes a producer.
       (5) Certain rules to apply.--Rules similar to the rules of 
     subsections (b) and (c) of section 6412 of such Code shall 
     apply for purposes of this subsection.

       Highway Tax Equity and Simplification Act (HTESA) of 1999


                              bill summary

       The Highway Tax Equity and Simplification Act of 1999 is 
     designed to improve the equity among taxpayers paying into 
     the Highway Trust Fund. In doing so, it eliminates 3 of the 
     separate taxes paid into the Highway Trust Fund and replaces 
     them with a straightforward tax that more fairly distributes 
     the tax burden among highway users.
       TEA 21 restructured the Highway Trust Fund's budgetary 
     treatment to ensure that transportation taxes would be spent 
     for transportation purposes. Congress did not, however, take 
     any steps to improve the allocation of transportation taxes 
     among highway users. Under current law, some users pay too 
     much into the trust fund relative to the costs they impose on 
     the nation's highway system while others pay too little. This 
     proposal more fairly apportions the tax burden to those who 
     impose the greatest costs to our highway infrastructure.


                            specific points

     Tax Simplification--3 Taxes Replaced with 1.
       This bill eliminates three taxes (the 12% sales tax on new 
     trucks, the tire tax, and the Heavy Vehicle Use Tax) and 
     replaces it with a straightforward and fair axle-weight 
     distance tax. The taxes that are eliminated are either poor 
     surrogates for user impact or raise relatively small amounts 
     of money and are duplicative of the new axle-weight distance 
     tax.
     Direct Correlation Between Taxes and Road Damage.
       Pavement and bridge damage imposed by trucks is directly 
     correlated to axle-weight loads and distance traveled. This 
     bill recognizes this clear and direct relationship and 
     imposes user fees based on this principle.
     No Tax Increase for Trucks Overall.
       The bill collects the same amount of tax revenue from 
     trucks overall as current law. The U.S. Department of 
     Transportation estimates that transportation taxes paid by 
     trucks total $11 billion annually, the same as under the 
     bill.
     Overwhelming More Winner than Losers.
       Under the bill, the vast majority of trucks--more than 5.9 
     million trucks--will see a tax reduction. This compares to 
     roughly 1.5 million who will see an increase.
     Eliminates ``Corporate Welfare'' for Heavy Trucks.
       By reforming the Highway Trust Fund taxes, this legislation 
     substantially reduces the subsidy provided to the heaviest 
     trucks using our nation's roadways. Most heavy trucks pay 
     less into the Highway Trust Fund than the costs they impose 
     on roads. The heaviest trucks pay less than half of the costs 
     of damage they inflict.
     Eliminates Perverse Provisions in Current Law.
       The Heavy Vehicle Use Tax (HVUT) under current law doesn't 
     apply to ``heavy trucks''. The HVUT is capped at 75,000 
     pounds--meaning that ``heavy trucks'' don't pay any more in 
     taxes as their weight increases even though the extra weight 
     does exponentially more damage to the nation's roads and 
     bridges.
       Secondly, the HVUT has no mileage component meaning that a 
     truck registered at 70,000 lbs traveling 10,000 miles per 
     year pays the same HVUT tax as an identical 70,000 pound 
     truck traveling 100,000 miles per year--not a fair or 
     sensible result.
     Administrative Burden.
       Under the bill, taxes are paid according to the distance 
     you traveled and your registered weight. The process is no 
     more complicated than reading your odometer and your truck 
     registration.
     Current Mileage Filing Requirements for Interstate Carriers.
       Under current law, all Interstate trucks are required to 
     file with their ``base state'' mileage logs that report 
     mileage driven in individual states. This existing 
     requirement of the International Fuel Tax Agreement (IFTA) is 
     more detailed than what is required for the axle-weight tax 
     included in this bill, which only requires the aggregate 
     total of all mileage driven.
     Reduces Double Taxation on Toll Roads.
       This bill reduces double taxation on toll roads by allowing 
     a credit against the axle-weight distance tax for travel on a 
     toll facility. (e.g., the Oklahoma Turnpike, the Pennsylvania 
     Turnpike, Ohio Turnpike, Florida Turnpike, etc.).
     Eliminates ``Diesel Differential''.
       The bill also eliminates the so-called ``diesel 
     differential'', where diesel is taxed at a higher rate than 
     gasoline. Under this proposal, the diesel fuel tax is lowered 
     from 24.3 cents to 18.3 cents, the same rate as gasoline.
     Overall Tax Equity Still Short by $4 Billion Annually.
       Proposal does not achieve perfect equity among all 
     contributors to the Highway Trust Fund. Although the bill 
     equalizes the relative tax burden among trucks, the trucking 
     sector as a whole will still underpay its fair share of 
     transportation taxes by $4 billion annually.
     State Transportation Departments Support Weight-Distance 
         Taxes.
       The American Association of State Highway and 
     Transportation Officials (AASHTO), the association 
     representing State Transportation Departments, supports 
     weight-distance taxes. AASHTO's policy resolution on this 
     matter finds:
       ``Truck taxes based upon a combination of the weight of the 
     vehicles and the distance they travel more equitably 
     distribute financing responsibility proportional to costs 
     imposed on the system than other tax alternatives.''
       AASHTO policy call for substituting a weight-distance tax 
     for the heavy vehicle use tax and all other federal user fees 
     on trucks except for a federal fuel tax--(the HTESA 
     proposal).
                                  ____



                  Cost allocation for cars and trucks

                  [Revenue to cost ratio--Current law]

Automobiles.........................................................1.0
Pickups/Vans........................................................1.5
Single-unit trucks:
    <25,000 lbs.....................................................1.5
    25,001-50,000 lbs...............................................0.7
    >50,000 lbs.....................................................0.4
Combination trucks:
    <50,000 lbs.....................................................1.5
    50,000-70,000 lbs...............................................1.0
    70,001-75,000 lbs...............................................0.9
    75,001-80,000 lbs...............................................0.8
    80,001-100,000 lbs..............................................0.5
    >100,000 lbs....................................................0.4

                      ANNUAL PER VEHICLE SUBSIDIES
            [Comparing taxes paid to pavement costs imposed]
------------------------------------------------------------------------
                                                   5-axle       6-axle
                                                semitrailer  semitrailer
------------------------------------------------------------------------
Registered weight:
     90,000...................................      -$3,864      -$2,188
    100,000...................................       -5,176       -4,985
    110,000...................................       -6,022       -7,746
------------------------------------------------------------------------

                    Pavement Damage--Cars vs. Trucks

       Underlying Principle--Pavement damage goes up dramatically 
     with weight.
       On a rural Interstate highway, a 100,000 lb standard 
     tractor-trailer wears the equivalent of more than 1,700 cars.
       On a rural arterial road, the same truck is equivalent to 
     3,500 cars.
                                  ____


                            Diesel Fuel Tax

       Diesel Tax meets one of the two guiding principles 
     discussed earlier, because the amount paid by trucks varies 
     by mileage.

[[Page S5377]]

       However, because diesel fuel usage only rises marginally 
     with weight increases, while pavement damage increases 
     exponentially, it also is a poor mechanism to align costs and 
     payments.
       Increasing rates for diesel, as is sometimes advocated by 
     the trucking industry in reaction to concerns about truck 
     underpayment, will not resolve this fundamental flaw.
                                  ____


                      Heavy Vehicle Use Tax (HVUT)


           heavy vehicle use tax doesn't live up to its name

       1. The HVUT is a poor surrogate for cost responsibility as 
     shown by the widening gap between the red and blue lines to 
     the right. HVUT taxes go up slightly with weight while 
     pavement damage goes up dramatically.
       2. Although the word use is in its name--this tax does not 
     vary by use or mileage. A truck traveling 100,000 miles per 
     year and another of the same weight traveling 10,000 per year 
     will pay the same tax.
       3. Although, the name implies it is targeted at heavy 
     vehicles, it does not increase with truck weight. Incredibly, 
     the tax is capped at 75,000 lbs, the point at which pavement 
     damage goes up dramatically.
                                 ______