Economic Effects of the Surface Transportation Assistance Act of 1982

Testimony was presented concerning a GAO analysis of the likely economic effects of the Surface Transportation Assistance Act of 1982 on different segments of the commercial trucking industry. The act significantly increases Federal taxes on tires, fuel, and equipment used by trucking firms. However, the act authorizes significantly higher expenditures for road construction and raises the existing limits on the size and weight of trucks allowed on the Nation's highways. Thus, the act could be beneficial to much of the industry as trucking firms reap productivity increases made possible by these provisions. GAO found that the economic effects of the act will vary greatly depending on the particular type of motor carrier involved. Less-than-truckload carriers will pay less in increased taxes than truckload carriers and will have the opportunity to realize greater productivity benefits through increases in the allowable size of trucks. Furthermore, since they face less competition from railroads, they can more easily shift cost increases on to shippers. Short-haul carriers should experience smaller additional tax burdens than long-haul carriers. They will also face relatively little rail competition, which will allow them to pass tax-related cost increases on to shippers. Long-haul carriers should receive greater benefits from highway and bridge improvements made possible by the act. Since owner-operator firms concentrate in long-haul and truckload shipments, they will be worse off than the rest of the industry under the act. However, they should receive greater benefits from highway and bridge improvements made possible by the act. They will experience larger tax increases because they use proportionately heavier trucks and drive more miles each year than the average heavy truck owner. Finally, because they face greater competition from railroads, they will have less ability to recoup any tax-related cost increases through higher rates.