New York State is the third most expensive state in the nation in terms of operating a truck. One of the reasons for this is that New York is one of only four states, and the only one in the northeast that still has a highway use tax (HUT). The antiquated HUT represents a lose-lose for both the industry and the state because compliance is an extremely burdensome ordeal which creates a culture of evasion. The administrative costs amount to about $16 per truck and it is costlier for the state to administer than fuel taxes and registration fees.
The evasion rate is, by it’s nature difficult to pin down. A study conducted by the American Traffic Research Institute (ATRI) from 2008 put it between 45%-53% for a resulting loss of $120 million. This puts New York carriers at a competitive disadvantage because it is far more likely that New York companies are the ones who are audited and are also the ones less likely to evade the tax in the first place. Essentially out of state carriers double dip by being more likely to evade the tax and less likely to be punished for evasion.
Compounding the issue if an out of state company fails to report their New York miles and evades paying HUT, they are also failing to pay other mileage based taxes such as the international fuel tax agreement (IFTA) and the international registration plan (IRP), decreasing revenue to the state.
A lawsuit won by the Owner Operator Independent Diver’s Association (OOIDA) resulted in a $44.4 million refund significantly reducing the revenue New York will receive via HUT moving forward. This combined with the fact that in 2020 the freeze that New York Governor Andrew Cuomo enacted on New York State Thruway tolls will expire. The more financial burdens placed on the industry, the higher the costs to customers and consumers. So, repealing the highway use tax before increased tolls is a smart move for the state.
HUT is a collection of three sources: the truck mileage tax (TMT), highway use permit fees, and the fuel use tax. The Trucking Association of New York (TANY) is advocating for the repeal of the TMT and highway use permit fee components ONLY. The 1/3 of HUT revenue derived from the fuel use component will remain. TANY also advocates for replacement revenue to be found by increasing registration and/or fuel tax. Interestingly New York is not one of the national leaders in these fees/taxes, so there is some room to maneuver.
Four of the last five states who repealed their HUT did not even request replacement revenue, yet they collected more highway user revenue than when HUT was in place. This is due to increased taxable gallons of diesel fuel. The elimination of HUT would benefit the industry, manufacturers, shippers, and consumers all while efficiently generating revenue to the state.
(Note: newyorktruckstop.com is not affiliated with the Trucking Association of New York [TANY]. However, Zach Miller, co-publisher of this site and a member of TANY, is the chair of TANY’s Metro Region Government Affairs Sub-Committee. Any questions? Reach Zach directly at firstname.lastname@example.org)