Bogged down in a war of words and thought to be headed for a Congressional hearing, the American Jobs Creation Act instead breezed through the Senate on Oct. 11 and was expected to be signed by President Bush without delay.
Why is this important? “Because of a rider attached to the bill that allows ‘wide base’ truck tires to be taxed at the same rate as bias-ply tires. A 4.725-cent rate per bias-ply tire times two tires equals a 9.45-cent rate,” says Tire Industry Association (TIA) Executive Vice President Roy Littlefield.
TIA strongly opposed the language in the Jobs bill regarding the Federal Excise Tax (FET) that now allows wide base tires including today’s super wides to be taxed at the 9.45-cent tax rate. “We think this is too high and will cause purchasers of these tires to pay too much in taxes,” said TIA. “The current definition of wide base tires opens up a much broader range than intended and could potentially produce a shortfall in the budget. It would be better to say that a wide base tire, when replacing two tires, should be taxed at a lower rate of about 7.25 cents. This would be more revenue neutral.”
Essentially, TIA opposed the language in the bill on behalf of its retread members. “Although we tried to open up the process for discussion, our letter to Sen. Charles Grassley (R-IA) on the Senate Finance Committee didn’t seem to matter,” Littlefield said. His ongoing concern has to do with the price differential between a new wide base tire and the cost of a retreaded tire.
“It was our intent to have the bill pulled and studied until a proper tax rate for wide base tires could be determined,” said Littlefield.
“I’ve been working the Hill since 1975 and have seen Senate members from both sides of the aisle working closely together. But now, there are very few hearings on bills and a lot of ill will in Congress,” Littlefield said, more about today’s politics in general than about the Jobs bill specifically. “These people don’t seem to like one another, make no bones about it, and they are difficult to deal with. Frankly, I’ve never seen it this bad.”
But Littlefield and TIA aren’t giving up. “We will readdress this issue next year when the Highway Bill comes up. Still, what just happened didn’t make Littlefield’s day. Wide base tires are a growing part of the market, and putting a provision into place allowing them to be taxed at a lower tax rate, in his view, is not revenue neutral.
Winter Tire Legislation
Wouldn’t it be better to toss out 50% of the laws already on our books and stop creating new ones? Fat chance. We hope matters won’t get worse because of a conversation taking place in England and other countries in the European Union (EU). The subject: making winter tires legally mandatory.
In Sweden, use of winter tires is compulsory. In Latvia, winter tires are obligatory from Dec. 1 through the end of February, and in Norway, drivers must fit winter tires to their vehicles during the coldest months. From Nov. 15 through Mar. 15, Slovenian motorists are required to use winter tires or radials with a minimum tread depth of 4 mm. According to Slovenian law, two winter tires per vehicle is sufficient.
Winter tires are not compulsory in Germany, but they are a legal requirement in some mountainous areas. In Italy, a motorist is not obliged to use winter tires unless the local authorities require it. Drivers in Finland must use winter ties from Dec. 1 through February, and in Austria, the use of winter tires is not mandatory, although their use can be enforced through road signs.
Confusing, isn’t it? Imagine this happening in the U.S. What would happen if winter tires were required for motorists in the northern regions of Pennsylvania, Ohio, Indiana and Illinois, while drivers in the southern portions of those states could use all-season tires unless they traveled to the northern part of the state, in which case they would need to mount winter tires? What a mess. We don’t need it.
Even so, observers in England are giving thought to the idea that government recommendations on the use of winter tires could lead to insurers offering reduced premiums to drivers who use winter tires. In Germany, it is reported that a driver involved in an accident could be held negligent in the eyes of insurers if the vehicle isn’t on the appropriate (read: winter) tires.
For now, the EU is waiting on someone to take the lead. Ditto for European insurance companies. In England, they are waiting for the EU to assume the mantel of responsibility.
This apparent stare-down match may take some time.