PRACTICAL REALITIES OF SALES TAX EXEMPTION ISSUE TO THE TRUCKING INDUSTRY
1. Hitting the 80% threshold may be harder now than it was when the exemption was first implemented:
- Asset management can change within two years from the time the equipment was purchased due to changing customer demands, changing seasons, customer additions/subtractions, employee staffing, etc. Slim margins and changing economic dynamics have created the need for more efficient asset utilization.
- Use of sub-haulers with trailer agreements is more predominant now due to a nationwide truck driver shortage. Use of owner-operators, brokers and other carriers allows for a more efficient supply chain.
2. Discouraging the purchase of equipment in Maine is antithetical to our desire for attracting and retaining economic development.
- Impacting truck and trailer dealers in Maine who pay taxes and employ Maine citizens.
- Also discourages carrier expansion or retention of operations if there is enough incentive to move out of Maine.
3. The intent of the exemption is to keep Maine carriers competitive with the carriers from other states who recognized the mobile nature of these businesses and implemented a sales tax exemption for rolling stock placed in interstate commerce.
- Addressing industry concerns is in keeping with the spirit of the exemption and shouldn’t create a fiscal note because it simply clarifies existing industry expectation/practice.
4. Complying can be complicated, time consuming and expensive to administer. Here’s what the carrier has to track to ensure compliance for EACH truck and trailer in their fleet:
- Time spent stationary at carrier’s location waiting to be dispatched.
- Time spent stationary at customer’s location loaded or waiting to be loaded.
- Time spent moving interstate commerce.
- Time spent moving intrastate commerce.
- Time spent moving empty for repositioning or maintenance.
- Time spent being used by a sub-hauler (almost always in interstate commerce), regardless of the presence of a trailer interchange agreement or payment for use of equipment