Keep retread incentive intact
AKRON (April 18, 2001) — There's nothing wrong with trying to simplify the procedure used for calculating the excise tax on highway truck tires.
The current system, based on tire weight, is complicated and time consuming for tire makers and requires tires to be re-weighed whenever modifications, new sizes and designs are introduced.
So coming up with a simpler system makes sense.
But Congress would be making a serious mistake if it allows such efforts to reduce or eliminate the pricing difference between new and retreaded truck tires. It should ensure that whatever method it decides to use is not detrimental to retreading, which is environmentally and economically in the nation's best interest.
The current proposal, spearheaded by the Rubber Manufacturers Association, is now before Congress. It would levy a tax of 8 cents for every 10 pounds of a tire's load-bearing capacity over 3,500 pounds.
The concern among retreaders — and the International Tire & Rubber Association, which opposes the measure — is that the rate is too low to preserve the all-important price differential between new and retreaded medium truck tires.
Any reduction in that would discourage the trucking industry's purchase and use of retreads, resulting in a number of problems. These include:
* Adding as many as 22 million tires annually to the nation's scrap piles;
* Increasing demand for petroleum-based feedstocks needed in tire making and exacerbating U.S. dependence on foreign oil;
* Reducing the number of retread shops and putting people out of work; and
* Increasing tire expenses for truckers, resulting in higher prices for almost everything that is shipped via trucks.
Behind fuel, tires are the second-highest expense in the operation of a truck. As such, anything that impacts truckers' operating costs will ultimately find its way to the consumer.
Congress would be doing the tire industry a favor by simplifying the way excise taxes are calculated, but only if it keeps the price differential between new and retreaded tires large enough to encourage recycling of tires.
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