Special Fuel Tax CUT for FedEx Preceded Haslam Push for Fuel Tax INCREASE on Regular Tennesseans

 

The Haslam administration and their pro-tax allies in the Tennessee General Assembly have increasingly relied upon a “user fee” argument to disguise the actual impact of their proposed gasoline and diesel fuel tax increase plan.

The bill, now under consideration in the current session of the Tennesssee General Assembly under its “new and improved” name, the IMPROVE Act “Tax Act Cut of 2017,” proposes to fund an additional annual infusion of $350 million for road and bridge construction through what is now a 6 cents per gallon gas tax increase and a 10 cents per gallon diesel tax increase.

Former Reagan official and respected economist Art Laffer specifically dismissed the “user fee” claim in testimony before the House Transportation Subcommittee last month.

“The talk about the gas tax being a user fee is not correct,” Laffer testified. “It’s a tax pure and simple.”

Nevertheless, in 2015 the Haslam administration promoted and passed a huge “user fee” jet fuel tax break to Memphis-based FedEx, whose Chairman Fred Smith sits on the Board of the Governor’s family business Pilot/Flying J, shortly before embarking on the effort to impose a huge fuel tax increase on Tennessee drivers.  The special tax break on aviation fuel was specifically limited to FedEx, and reduced the taxes paid by the company by about $10 million in the first year and will reduce the annual taxes paid by FedEx by over $20 million a year by year four.

The reduced collections in aviation fuel taxes are expected to have an impact on 79 mostly rural airports across Tennessee who have depended upon those funds for maintenance and lighting needs. While FedEx “uses” the jet fuel they use in their jets, just as Tennessee drivers “use” the gasoline and diesel fuel they put into their automobiles and trucks, the “user fee” argument apparently doesn’t apply to the giant corporation.

The secretive ownership interests and financials of Pilot/Flying J were exposed somewhat in the wake of a federal investigation and numerous indictments of senior officials at the family business owned in part by Governor Bill Haslam. Fred Smith, the CEO of FedEx reportedly serves on the Board of the Governor’s family business.

Legislators have shown no interest in repealing the special $20 million fuel tax break granted to FedEx while they move forward with a $288 million fuel tax increase on Tennessee drivers.

Ironically, State Sen. Mark Norris (R-Collierville) who pushed through the FedEx tax CUT on behalf of Governor Haslam is also pushing the fuel tax INCREASE on regular Tennesseans at the Governor Haslam’s request.