Home
»
Trains Magazine
»
Forums
»
General Discussion
»
Repeal of the 4.3 cents per gallon RR fuel tax

Edit post

Edit your reply below.

Post Body
Enter your post below.
[quote]QUOTE: Originally posted by Limitedclear [quote]QUOTE: Originally posted by futuremodal Quothe Ed H of the AAR: "Railroads and barges are currently the only modes of transportation that pay a fuel tax into the general fund," said Association of American Railroads President and Chief Executive Officer Edward Hamberger in a prepared statement. "Fuel taxes paid by other modes go to support their right-of-way while #8230; railroads pay virtually all of the costs to maintain and improve their infrastructure. We urge President Bu***o sign [the bill] into law." If as expected the repeal of the 4.3 cents per gallon fuel tax on railroads and barge lines comes into effect, does anyone think that the railroads will take this tax break and apply it to their infrastructure needs for which they are begging for federal aid? Doubtful. It would have been better for the feds to take this 4.3 cents and use it to pay for the eventual federal intervention into rail infrastructure upgrades that are being lobbied for by the railroads. In an ironic twist, instead of the railroads paying into the general fund, they will now be taking from the general fund. As usual, it is the average Joe taxpayer who ends up getting screwed. [/quote] Dave- You really need to actually read the legislation before criticizing. The repeal is phased in over several years amounting to less than a penny per gallon annually. Most railroads, even Class 1s will receive minimal benefits. Really the UP and BNSF as the largest U.S. railroads will be the only ones receving much benefit at all. In any event, other modes (highway, barge, air) have the benefit of trust funds funded by their various fees and taxes while rail doesn't. Rail doesn't want to have a trust fund, the railroads would rather be left alone. While we're on the subject railroads already pay heavy property tax on their infrastructure that the other modes don't which more than makes up for the kind of differential in taxes. LC [/quote] Yes, I did read the legislation, but you missed the point. It is irrelevant if it is phased in over several years or all at once. The point I'm trying to make is that the money the railroads save from the repeal of the tax more than likely will not go into infrastructure improvements, rather it will go into stock options, lobbying, non-rail investments, etc. We've discussed this before, the railroads will downsize the labor force and defer maintenance to sex up the balance sheet, instead of spending on capital improvements to speed up and flex up operating capacity, which in turn would lead to more business. What galls me more than anything is the attempt by the railroads to get the feds to aid in paying for infrastructure improvements after all the financial chicanery that goes on. This goes on because of the limited playing field in which would be rail competitors can only dream of entry. Since we don't (yet) have a separation of operating companies from infrastructure owning companies (which would solve the problem of open accountability for infrastructure spending), it may be necessary for the feds to slap a fuel tax on railroads and use this money as a trust fund for rail infrastructure improvements. In a sense, the feds would force the railroads via this user fee to spend the necessary funds for infrastructure which the railroads themselves are loathe to spend due to the dichotomy of the opposing forces playing in the background of railroad finances: On the one hand we have the inherent inefficiencies of monoplolistic/oligarchial behaviour which force the tendency of disincentive for optimal capitalistic actions, and on the other hand the forces of Wall Street which demand ROI's in the mode of the technology sector, an impossibility for capital intensive industries.
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag