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Repeal of the 4.3 cents per gallon RR fuel tax

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[quote]QUOTE: Originally posted by Limitedclear [quote]QUOTE: Originally posted by futuremodal [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. [/quote] I can see that we will never agree on many things. The level of financial manuvering in the railroad industry is minimal compared to many other industries and the concept of open access isn't going to happen anytime soon so I wouldn't hold my breath. The idea of slapping big taxes on the rail industry is simply reregulation dressed up in different clothing with the same inevitable result, driving major railroads to bankruptcy and forcing more downsizing of the railroads making rail service more difficult to obtain and further marginalizing the rail industrys ability to move commerce. That "plan" has been tried already and failed miserably. You must LOVE trucks. Got anything new? LC [/quote] I LOVE all transport modes - rail, truck, barge, pipelines. I just would like to see them do a better job of working together, each engendering their relative advantages to the betterment of the nation. (Interesting, I think the President of Horizon Lines recently made the exact same comments). To say that levying a fuel tax on railroads to allow the feds to pay for the railroads needed but ignored infrastructure improvements (and improvements which the railroads themselves are trying to con on the feds ie. we the taxpayers), to say that that is a form of reregulation is simply not accurate. Do you want to expand rail's share of intercity freight or not? We all know that the RR's themselves aren't going to make the necessary improvements, what with their low ROI's to begin with. Yet we obviously have capacity problems on railroads, otherwise they wouldn't be turning away business. Any Class I that feigns capital improvements will have a lesser balance sheet (albeit temporarily) than the Class I that defers such action. When that occurs, the Wall Street types complain and the end result is the Class I that tried to make the improvements ends up having it's directors and managers let go, and then new suits are brought in and the capital improvement program ends. The only way to rectify this situation while ameliorating the RR's desire for federal intervention in infrastructure improvements is for the feds to force savings via the fuel tax, from which the necessary funds will acrue to be doled out to the beggars for the needed capital improvements. Yes, it's a sorry commentary on so called free enterprise when the feds have to do what the privateers refuse to do, but that's what happens when the feds allow the oligarchy to form. This point MUST become clear to all, that when you allow monopolistic behaviours to get a foothold, the end result is gross inefficiencies in the market place. In a true free market with competitive rail access, the rail industry would OWN a 70% market share (albeit with the inclusion of intermodalism). The STB, in their foolish attempt to aleviate the problem of RR's profitability by allowing the mega-mergers of the 1990's (rather than lifting the burdens of capital over-regulation and property taxation to equalize the playing field among rail, truck, and barge) created this problem, and now it is up to the feds to correct it in a fashion that will assign accountability to the expenditures of the railroads. If open access is too radical, then this fuel tax to pay for rail infrastructure improvements is at least a step in the right direction.
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