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HIGHWAY USE TAX ON TRUCKS MAY BE ROLLED BACK BY STATE

This may be the year that a 47-year-old emblem of New York's anti-business climate falls.

The state appears set to roll back its highway use tax on trucks, an only-in-New-York levy that increases business costs and hobbles New York industry, according to the trucking lobby.

"It's devastating to New York State's trucking industry and it's a burden on manufacturers -- its a cost that gets passed on," said William Joyce, executive director of the New York State Motor Truck Association in Albany.

New York's "ton-mile tax" charges 6.6 cents per mile for loads carried within its borders. Only five other states charge a similar use tax, and only one -- Oregon -- charges as much as New York, according to a study commissioned by the trucking association.

Bipartisan proposals to cut the tax have a fair chance for success this spring in the state Legislature because of the state's relatively bright revenue picture, industry and legislative sources said. The tax raises about $150 million a year in a state budget of roughly $70 billion.

"I'd give it a 50-50 chance that we'll at least see a reduction," Joyce said.

Senate Majority Leader Joseph L. Bruno, R-Brunswick, has proposed cutting the tax in half over two years. Assemblyman David Gantt, D-Rochester, chairman of
the Transportation Committee, proposed repealing it entirely. The two measures will be reconciled by a conference committee that's hashing out the state budget, Gantt said.

"My proposal is to get rid of it -- it puts our local business people at a disadvantage," Gantt said.

Kenmore Democrat Robin Schimminger, co-chair of the conference committee, favors rolling back the trucking tax, legislative director Angela Berti said.

Because the tax applies to freight traveling within the state's borders, it raises transportation costs for supplies that companies purchase, and for the products they ship to customers, Joyce said.

"Coca Cola (statewide) figured out it was costing them an extra $30,000 a month," he said.

At Rich Products, the highway use tax combines with other state fees on trucking to increase the company's cost of doing business, said Jack Ampuja, vice president of purchasing and logistics.

"I think there's no question that they (out-of-state competitors) have an advantage because of higher costs here," Ampuja said. Trucking companies "face a number of taxes, and when you add them up, its significant."

Rich Products uses about 50 trucking companies to deliver its products throughout North America.

Trucks traveling within the state's borders must pay fuel taxes, registration fees and sales taxes as well as the highway use tax, critics noted.

Enacted in 1951, when industry regulation guaranteed profits, the 6.6 cent-per-mile levy is largely responsible for pushing taxes on New York trucking to $16,232 per truck, 59 percent higher than the national average of $10,232, trucking officials said.

Repeal would cut the average bite to $10,942, the study estimated. The figures are based on a vehicle weighing 80,000 pounds that logs 80,000 miles a year. The study was reviewed and endorsed by Syracuse University economist Douglas Holtz-Eakin, who said its methods followed accepted models.

In Western New York, truckers call the use tax a slow poison that is weakening the trucking industry while out-of-state competitors benefit.

"That's 60 grand right off my bottom line," said Russell Deveso, general manager George W. Burnett Inc., a Buffalo trucking company.

"It affects everything -- including the groceries on the shelves."

In addition, New York has difficulty auditing companies outside its borders, leading to rampant cheating by out-of-state truckers, Joyce and Deveso charged. Spot checks reveal out-of-state trucks frequently don't display a state use-tax sticker, indicating that they're ignoring the tax entirely, Joyce said.

A spokesman for Conrail, the state's dominant freight railroad, said he wasn't aware of any company opposition to the repeal of the truck tax. The Association of American Railroads in Washington, D.C., has no position regarding the tax, a spokesman said.

Backers of repeal said their only opponent is the fiscal pressure caused by erasing the $134 million in net annual income that the tax generates, after collection costs. The money pays interest on bridge and highway bonds.

"They'll (legislators) will say, 'you want to be careful about that,' " Deveso said.

The motor truck association proposes shifting fuel tax revenue to pay the bond interest. Truck fuel taxes are currently absorbed by the state general fund.

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