Current Issue
Published on June 7, 1999

KEEP EXCISE TAX ON TRUCK TIRES

Retreading is recycling, the Tire Retread Information Bureau likes to say. Tire industry officials should keep that in mind as they weigh the pros and cons of proposed legislation to repeal the federal excise tax on new truck tires.

Most business people we know generally oppose higher taxes and are strong advocates of fair and open competition.

Looked at strictly in this way, the idea of eliminating the excise tax would seem to make sense.

Under this scenario, retreaded truck tires would stand on their own merit and compete freely in the market with new tires. That's the essence of a capitalistic system.

If tire disposal were not such a huge national problem, we could side with removal of the tax.

But eliminating the excise tax on new truck tires would only make retreads less cost competitive and lead to a greater number of tires being scrapped prematurely.

The end result is more tires entering landfills across North America. This assumes new tire makers are capable of meeting the increased demand.

Creating a tax credit for end users of retreads also has little appeal.

It would only delay the economic benefit received for using retreads and shift the record-keeping burden to the end user.

Presently, fleets enjoy an immediate savings when purchasing retreads.

But under the tax credit idea being floated, retread buyers would have to wait until the following tax season to apply the credit toward their federal income tax.

This would further discourage the use of retreaded tires.

Passenger tire retreading offers a glimpse of what could happen if prices of new and retreaded tires get too close.

Once the backbone of the retreading industry, passenger tire retreading is on the verge of extinction largely due to competition from inexpensive new tires and the scarcity of quality casings.

The same situation could befall retreaded truck tires should the excise tax be repealed.

Retreading tires is the most desirable means of recycling them. Multiple retreadings offer the prospect of extending the life of a truck tire by hundreds of thousands of miles.

Fleet owners need the savings advantages retreads offer and the nation needs to do whatever it can to reduce the number of tires scrapped each year.

Eliminating the excise tax and creating a tax credit only complicates the issue.

The real importance of retreading is that it prolongs the use of a product that has little recognized value once it's worn out.

Using truck tires to their full potential is in the best interest of the fleet owner, the tire and retreading industries and the public at large.

With this in mind, we favor keeping the excise tax in place.

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