Proposed PA Fuel Tax Hike May Cost Trucking Companies 300K Yearly

Fuel Tax

Bad news for small carriers that route through Pennsylvania: Your bottom line may be increasing to the point of truck driver cutbacks. How much? Nearly 400,000 in the first year alone.

The proposed fuel taxes are some of the newest Go To plans for states to fund infrastructure shortfalls on the backs of trucking companies, which they say cause the most stress and damage to highways and bridges. Once again, small carriers are being hit with unforeseen costs after a year filled with flat profit rates and difficult natural events that hurt cargo delivery in the northeast.

“Diesel fuel is our number one expense,” Chris Patton, general manager of Watsontown Trucking Co. said. “We have a fleet of 250 trucks and they’re mostly on the road at any one time. We buy about 3,500 gallons of diesel fuel a day. Raise the current price of $3.94 a gallon by 30 cents and we take a big hit. If we pass along that price to our clients, it will eventually trickle down to the consumer.

“This idea,” Patton said, “is not good for anyone.”

Under Corbett’s budget plan, Pennsylvania gasoline taxes would rise an average of about five cents a gallon a year annually over the next five years to pay for a $1.8 billion increase in transportation funding.

“Every year, nearly half-a-trillion dollars worth of goods and services move through our state transportation system,” Corbett said during prepared remarks. “Transportation is the bloodstream of our economy. If it fails, our economy fails.”

Nearly half of the new annual revenue would come via ending a cap on a tax on wholesale fuel prices.

The change was touted in 2011 by an advisory commission to the governor on transportation funding. The Transportation Funding Advisory Commission estimated a $3.5 billion annual shortfall in funds needed for roads, bridges and transit.

Lifting a cap on the oil company franchise tax would increase the per-gallon tax on fuel about 28 cents over five years. Currently, the tax applies only to the first $1.25 per gallon of the wholesale price.

The state had the nation’s highest percentage—26.5%—of bridges designated as structurally deficient, meaning engineers have identified a major structural defect, according to a 2011 report (PDF) by Transportation for America, a coalition of business and transit groups advocating for increased transportation spending. The American Society of Civil Engineers gave the state a grade of D-minus for its roads in 2010, noting that 38% of the state’s roads were rated fair or poor.

The Corbett plan was “was met with criticism almost immediately.”