An Analysis of State Imposed Taxes and Fees on Motor Carriers of Passengers

Report No: 80-R16

Published in 1979

About the report:

The research reported here was undertaken in response to a request by the Legislature of Virginia that a study be conducted of state imposed taxes and fees on motor carriers of passengers, the purpose being to determine the effects a reduction in one or more of these taxes would have on state revenue and on the carriers' ability to continue to offer regular-route passenger service. The first section of this report describes the various taxes and fees which have been levied on motor carriers of passengers since 1974. It shows that not all taxes and fees on these carriers are dedicated to transportation. Since the repeal of the motor fuel tax in 1979 and the gross receipts road tax in 1978, only registration fees, titling fees, and the sales and the use tax remain dedicated to the trust fund. Among the taxes dedicated to general use are rolling stock taxes (property taxes that go to localities), Corporation Commission special revenue taxes, corporation franchise taxes, filing fees for certificates of convenience and necessity, and state income taxes. The second section of the report shows that the private passenger carrier market is dominated by Greyhound and Trailways and their affiliates, both in terms of income generated and number of buses, and that only 5.7% of the vehicle miles of travel was supplied by companies other than Greyhound and Trailways or their affiliates. Furthermore, it is shown that a number of the non-affiliate companies operate special charter in addition to regular-route service, thereby subsidizing the regular routes that do not generate break-even revenue. Notwithstanding the apparent tendency (and necessity) to engage in internal cross route subsidies, the industry has remained notably stable, except for a decline in vehicle miles of travel during the last decade. Most of this reduction in mileage has been made by Greyhound and Trailways, while specialized services of the airport and van variety have increased their vehicle miles of travel. The third section of the report presents estimates of the tax revenue generated by passenger carriers and shows clearly the relatively small amount of revenue generated by this group of highway users. Other major conclusions relevant to taxes on passenger carriers follow. 1. Passenger carriers historically have generated less than 0.2% of state generated money for transportation. While the total revenue generated by passenger carriers during the past has averaged less than $1.5 million annually, the removal of the gross receipts road tax and the motor fuel tax has reduced this amount to less than $400,000 in 1979. 3. Greyhound and Trailways received approximately 70% to 75% of the tax relief granted through removing the gross receipts tax and the motor fuel tax. Their tax reduction amounted to $560,000 in 1979. 4. Because taxes represent a relatively small portion of variable costs and because market data suggest that the problems of the declining mileage of carriers are largely related to inadequate demand, relief from remaining state imposed taxes and fees would not likely forestall demand occasioned trends toward reductions in service. However, the recent removal of the motor fuel tax and the road tax can be viewed as being encouraging to the carriers, and is being in instances where demand has been on the margin between a break-even and a loss level.

Disclaimer Statement:The contents of this report reflect the views of the author(s), who is responsible for the facts and the accuracy of the data presented herein. The contents do not necessarily reflect the official views or policies of the Virginia Department of Transportation, the Commonwealth Transportation Board, or the Federal Highway Administration. This report does not constitute a standard, specification, or regulation. Any inclusion of manufacturer names, trade names, or trademarks is for identification purposes only and is not to be considered an endorsement.


  • Gary R. Allen, Ph.D.

Last updated: January 24, 2024

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