The fleet industry faces many challenges that slow down its expansion. Some of these challenges include high costs of operating fleet vehicles – fuel cost, repair and maintenance costs, insurance costs, personnel costs, and economic fluctuations, among other factors. It is on this premise that it becomes important to minimize costs in the fleet industry to keep afloat. Technology has helped control costs in this industry through systems that monitor driver behaviour and vehicle usage. This helps to minimize fuel wastage, vehicle deterioration, and unnecessary labour costs. For such systems, visit www.eyerideonline.com for the best fleet management solutions that will greatly reduce your fleet business costs and enhance efficiency.
The tax reform bill effect
On 22nd December, 2017, US president Donald Trump signed a tax reform bill. There is hope that the bill will promote economic recovery, encourage the return of the corporate revenues from abroad to the country, and empower fleet management firms to make non-tax driven decisions concerning the business operations. This is, according to some experts, pushed by fleet management companies.
This tax reform bill is apparently the greatest restructuring of the tax system in 30 years. It brings down the corporate tax rate from 35% to 21%, decreases the rates on individual tax temporarily up to 2025, and makes the rate of standard deduction to become twice as much as it was.
However, it is being seen that the newly enacted law will not provide any significant benefit to the fleet industry. This is because the added advantage offered by the fleet management companies and the demand for business-related transportation remains unaltered. The aim of the new tax law is seen to do away with tax-related decisions as much as it is practically possible.
A give and take situation
Some aspects of the tax law will reduce the costs of fleet management firms by decreasing the tax burden. Such aspects include the reduced tax rates and a short-term bonus depreciation exemption. On the other hand, the gains made will be reversed by some elements that are anticipated will increase costs. These include restrictions on recovery of interest cost, expiration of bonus writing off over time, and a revenue transfer tax.
The effect on clients of fleet management companies
According to a leader of a fleet management company, the impact that this tax reform law will have on the customers of fleet management companies will depend on the kind of business that they run. The clients who own or lease assets that are meant for transportation, more so those in the technical and service sectors, will have the best opportunity to expand their businesses since there will be an increase in the customer’s needs. There is also an expectation that those businesses which are inclined towards distribution either of own products or of others will have the biggest growth opportunity.
The tax reform bill is a good one at face value, but it has some areas that will impact negatively on fleet management business.