OTA Dispatch Issue 4 2017

26 Oregon Trucking Associations, Inc. Oregon Truck Dispatch A Primer on Highway Use Taxation in Oregon By Gregg Dal Ponte, OTA Director of Regulatory Compliance COMPLIANCE H ighway use tax systems are made up of three basic components: vehicle registration fees, fuel use taxes and “third structure” taxes. Third structure is the catchall category that includes all other taxes associated with the use of our highways or the operation of a vehicle. The most contentious third structure tax today is the weight-mile tax assessed against the trucking industry. Weight mile tax is a form of taxation that is based on the combined weight of the vehicle and its load and the number of miles that it travels. Weight mile tax rates increase proportionately to rising truck weights. Hence, since the heavier the movement the more wear and tear on the road, weight mile tax is considered a “cost responsible” form of taxation. Oregon’s highway use tax system is relatively simple although unique. Both automobile and truck owners pay a vehicle registration fee. In addition, automobile owners pay fuel taxes. With some minor exceptions, heavy-truck operators pay no fuel tax in Oregon. However, they do pay the weight-mile tax. This is a relatively unique arrangement. Currently, three other states (Kentucky, New York, New Mexico) use the weight-mile form of taxation. However, they also collect fuel use taxes from the trucking industry. Oregon is the only state that does not collect a fuel use tax on heavy trucks and instead relies solely upon a weight mile tax. Oregon has a unique history in terms of highway use taxation. In 1919, Oregon became the first state in the nation to use fuel taxes to finance its roads. In 1933, Oregon implemented the nation’s first weight and mileage based tax for trucks. However, this tax was different from the one in place today. It was a ton-mile tax in which a different tax rate is charged for each load transported by each truck. The tax rate varies as the loaded weight of the truck varies. In 1937, Oregon completed the first cost responsibility or cost allocation study. These studies attempt to proportionately allocate the cost of our roads to all users. In 1947, Oregon changed its ton-mile tax to the present weight-mile tax where, according to theory, a single tax rate is charged for all miles of travel based on the highest operating weight of the truck. The Oregon tradition of leadership in the highway use tax area has continued into the current era. In 1990, Oregon implemented the first axle weight- distance tax that explicitly considers axle weights in the structure of the tax system. The axle weight sensitive tax applies only to the heaviest trucks operating on our highways or those trucks operating over 80,000 pounds. The trucking industry’s opposition to Oregon’s weight-distance tax began as early as the 1950’s. In 1952, the industry sponsored a referendum that would have made weight-distance taxes unconstitutional. That referendum failed, yet industry opposition to the weight-mile tax continues today. The industry contends that Oregon’s weight-mile tax is expensive to pay and to collect; evasion is widespread and, with the elimination of weight-distance type taxes in 23 states, Oregon is simply out of step with most other states. Enforcement of Weight Mile Tax Collection in Oregon Weight mile tax is based on the weight of the vehicle, the distribution of that weight on the axles, and the distance traveled. The statutes contain two weight mile tax tables, Table “A” and Table “B”. Table “A” weight mile tax rates applies to trucks with declared weights between 26,001 to 80,000 pounds. A truck weighing 80,000 pounds creates more wear and tear than a truck weighing 30,000 pounds so Table “A” rates are higher for heavier vehicles. Table “B” tax rates apply to divisible loads over 80,000 pounds and up to 105,500 pounds and non- divisible loads over 80,000 pounds and up to 98,000 Oregon is the only state that does not collect a fuel use tax on heavy trucks and instead relies solely upon a weight mile tax. Both automobile and truck owners pay a vehicle registration fee.