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The Case for IFTA

“I love paying taxes”. Who wouldn’t want to give up part of their hard earned (hopefully) paycheck in a forced contribution to the government, right? Wrong. The fact is, you never hear anyone saying that…but the reality is very few complain about the benefits they personally receive from taxes. The tax argument boils over how much, what for, and for whom. Motor fuel taxes are no different. On this first weekend in March, this article will look at the International Fuel Tax Agreement (IFTA) and what those taxes mean to the public.

Like in all industries, there are those who succeed and are wealthy, and there are those who are not. The belief that the trucking industry as a whole is flush with cash is a falsehood. If one takes a hard look at the regulatory compliance overhead in trucking, there is not a lot of room for error, successful or not. If the same person were to compare the amount of fuel they consume to the average truck driver, it would be evident that the trucker probably pays more in fuel tax than the average car driver.

The reality is that trucking is the biggest consumer of motor fuel and thereby pays the most in motor fuel taxes. The irony is that the industry does not mind paying their fair share in taxes…with a couple exceptions. One, the monies collected need to go where the money is supposed to go – roads. Because the industry travels the most and heaviest miles on the roads, they need to pay for this use. Second, the motor fuel tax levy needs to be consistent with all vehicles. Trucking should not have to pay a disproportionate tax. These costs will only be passed onto their customers, and eventually onto consumers by way of inflation.

As the economy lags, statehouses across the nation are looking for legislation to increase funding to stimulate jobs. Roadbuilding is a massive job creator. To fund roads, motor fuel tax is the obvious victim. The irony is you do not see much opposition, if any at all, from the trucking industry. They are willing to pay more in motor fuel taxes. Roadbuilding creates more jobs for their industry, and improves the quality of the infrastructure trucks – and cars – use freely.

Illinois is no different. You are hard pressed to find anyone who would argue Illinois taxes are low, but Illinois is in the lower half all of states in regards to motor fuel tax. The 19 cents/gallon for gasoline and 21 cents/gallon for diesel has not changed in Illinois since 1990. What makes fuel expensive in Illinois is the local sales taxes added to that. Will Illinois increase that rate in 2013? Maybe…Springfield is looking at all solutions.

The Chicagoland area of Illinois is economic hub of the midwest. The region is robustly served not just by trucking, but also rail, water, and air transportation. Here is a fact from our friends at the Illinois Trucking Association: one-third of the nations Gross Domestic Product can be reached by a one-day drive in a truck from Chicago. Is there any wonder why trucking in Illinois is such a massive industry?

This is why fuel tax is so important in Illinois. Even though Illinois is not at the top of the motor fuel tax hill, Wisconsin is the only nearby state with a higher motor fuel tax on diesel. In essence, a trucking company can set up shop in Indiana/Michigan/Iowa/Missouri/Kentucky, operate almost entirely in Illinois, yet purchase all their fuel at a lower rate in their home state.

Why does this matter to law enforcement? On March 1st, enforcement for 2013 IFTA violations began. The ITEA wrote an article about this in February 2012 and also has a Standard of Practice for fair enforcement available to its membership. As can be seen above, compliance with motor fuel regulations by carriers operating in Illinois is paramount. The end result of compliance needs to be met, but improper enforcement is not the means.

IFTA is the method to make sure Illinois is compensated for miles put on our roads by certain (not all) carriers from other states. It’s only fair…and police officers need to make sure they have a firm understanding of IFTA rules and regulations before penalizing those that have already paid their taxes to Illinois.

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