Trucking groups voice concerns over Connecticut’s highway use tax

With a highway use tax in Connecticut set to go into effect at the start of 2023, a number of trucking organizations are voicing concerns about the impending fee.

In June 2021, Gov. Ned Lamont signed into law a bill to establish a highway use fee or tax. The new charge is applicable to commercial vehicles with a classification of Class 8 to Class 13 and with a gross weight of 26,000 pounds or more. Exemptions will be made for milk haulers traveling to or from a dairy farm.

The tax is calculated based on the vehicle’s weight and number of miles driven in the state, ranging from 2.5 cents per mile for vehicles weighing 26,000 to 28,000 pounds to 17.5 cents per mile for vehicles weighing more than 80,000 pounds.

Calculating the tax is the responsibility of the carrier or driver. The fee is calculated at the end of the month, and fees are due on or before the last day of the following month. The penalty for an incomplete or late filing is 10% of the amount of the tax due or $50, whichever is greater. According to Connecticut statutes, anyone who knowingly violates the new law will be fined $1,000.

Carriers and drivers with vehicles meeting the criteria will have to register online for a Highway Use Fee Permit with the state’s Department of Revenue Services before Jan. 1. After registering, the permit is available via MyConneCT, the state’s online filing and payment system.

According to the Connecticut Office of Fiscal Analysis, the highway use tax is estimated to generate $45 million in its first year and up to $90 million each subsequent year.

The Motor Transport Association of Connecticut has called upon state lawmakers to repeal highway use fee.

The group says that several developments have occurred since the governor signed the bill into law that make the new tax – which was designed to help fund improvements to the state’s infrastructure – largely unnecessary.

The first was the passage of the federal infrastructure law in November 2021. As part of the law, Connecticut will receive $5.38 billion in federal funding. The group says that when the highway use fee was passed, the state was unaware of the federal funding that would be coming its way.

“In June 2021, when the state’s highway use tax was signed into law, we had no idea if the federal infrastructure bill would pass or not,” Joe Sculley, vice president of the Motor Transport Association of Connecticut, said in a statement. “The good news is that it has passed, and we now know that the state is going to reap financial benefits from it.”

The Motor Transport Association also points to projections from Connecticut’s Office of Fiscal Analysis, which show the state’s Special Transportation Fund will run a surplus for the next several fiscal years. According to the group, these projections were not known by the state when the highway use tax was signed into law. Furthermore, data from the Office of Fiscal Analysis shows the transportation fund will still run a surplus through 2026, even if projected revenue from the highway use tax is subtracted from estimates for future fiscal years.

The group says the tax will affect parties outside of the industry as well.

“Whether it be the diesel tax you’re hitting us with,or the (highway usage fee), that gets passed on to consumers,” MTAC president John Blair told WVIT.

Sculley said those costs are being passed on to a group that is already feeling the pinch.

“Connecticut residents are already paying more for food and gas than they were a year, or even six months ago,” he said. “Allowing this tax to take effect will exacerbate the inflation that is already being experienced.”

During Senate floor discussions regarding the bill, Senate Republican leader Kevin Kelly of Stratford said the truck tax is a bad look for the state and would ultimately impact consumers.

“The very people we praised as frontline essential workers during the pandemic, who went above and beyond to transport necessities to us when we could not go very far ourselves, would be the target of this tax,” Kelly said. “And the tax will be passed on to our families.”

OOIDA is working with state officials to determine how the tax will actually work.

With the tax going into effect at the start of the new year, OOIDA’s Business Services Department has seen an increase in calls from drivers concerned about the fee and compliance.

Aside from the concerns outlined by the Motor Transport Association of Connecticut, OOIDA also is working to sort out the details – details that are raising more questions than answers.

The department has been in contact with state officials to seek clarity on how the regulation will be enforced and how drivers will remain in compliance. They say that some of the concerns may be spurred by the state not giving adequate time for drivers and carriers to get up to speed with the new regulations.

One example of this is the state’s website. A page explaining the new tax, how it will be assessed, and how to file for a permit was not provided until earlier this month. Furthermore, the state recently sent out around 140,000 letters to carriers and drivers alerting them of the fee’s effective date – with less than two months to prepare.

Dale Watkins, manager of OOIDA’s Business Services Department, says that maintaining compliance with the new tax may prove to be more difficult than that state has anticipated.

“I think it’s going to be a big accounting nightmare for motor carriers to comply with this, or try to comply with this, and for the state of Connecticut to process and to audit it. Some of these things, I don’t know how you would go about keeping records. Like what does a truck weigh when you enter the state? What happens if you bobtail into the state and then pick up a trailer – what weight do you use?”

With more questions than answers on the compliance and enforcement front, OOIDA remains wary of the new tax and will continue to press state officials for clarity ahead of the Jan. 1 deadline.

Currently, four other states – New York, New Mexico, Kentucky, and Oregon – have some version of a highway use tax in place for commercial vehicles. LL