Tax Cut Should Spur Fleet Industry Growth
A tax reform bill signed by President Donald Trump on Dec. 22 is expected to spur economic expansion, bring off-shore corporate revenues back to the U.S., and help fleet management companies make decisions about their operations that aren't tax driven, fleet management company experts said.
The bill — the most significant overhaul of the tax system in three decades — reduces the corporate tax rate to 21% from 35%; temporarily lowers individual rates until 2025, and doubles the standard deduction.
Fleet management companies aren't expected to significantly benefit from the new law.
"Overall, the value provided by fleet management companies and the need for business transportation does not change," said Shlomo Crandus, chief financial officer of Wheels, Inc. "The new tax plan was seeking to eliminate tax-driven decision making as much as possible."
Several elements of the bill would reduce costs for fleet management companies, including lower tax rates and a temporary bonus depreciation exemption. Other elements are expected to raise costs, such as limitations on interest deductibility, expiration of bonus depreciation, and a repatriation tax.
AT&T and other companies embraced the news by offering bonuses to their workers. Emkay will offer $1,000 bonuses, the Itasca, Ill.-based fleet management company announced.
Clients of fleet management companies would be impacted based on the type of business they operate, said Tom Coffey, vice president of sales and marketing for Merchants Fleet Management.
"Merchants sees companies that own or lease transportation related assets, especially firms in the service and technical segments, as best positioned to grow their businesses as their customer's needs increase," Coffey said. "While sales and management fleets are not expected to contract, businesses oriented toward the service and distribution of their own products or those manufactured by others, should experience the most growth."