Haslam's Motive?

Haslam proposes fuel tax hike to pay for Pilot’s fraud?

tennesseeleaders.com-The Haslam family and privately owned company Pilot Flying J operate over 700 travel centers in 43 states and Canada. There are 31 locations in Tennessee.

The Pilot centers have convenience stores, fast food restaurants and other amenities that truck drivers want.

The Pilot centers sell billions of gallons of gasoline and diesel fuels. In 2015, the company’s sales were reported between $22 – 30 billion. “Pilot is the nation’s largest provider of diesel fuel to over-the-road trucking companies. They sell six billion gallons of fuel annually to more than 5,000 corporate customers…”

In 2014 Billy’s brother Jimmy Haslam, Pilot’s CEO, signed the “Criminal Enforcement Agreement” to settle a large customer rebate fraud case. Pilot had to pay $56 million in restitution to its customers, $92 million in penalties for cheating customers and $14 million in auditing costs. The total – $162 million.

Hmmmm, where will that money come from?

First, let’s look at how Pilot makes money. Selling and distributing (mostly) diesel fuel from their own stores along the interstates: SIX BILLION gallons last year!

Pilot is owned privately by the Haslams (Gov. Bill has refused to put his Pilot ownership in a blind trust, i.e., he is an active owner), so finding financial data is difficult.

Industry research however, gives us a close estimate of the of Pilot’s profits: Fuel distributors make about 4 cents per gallon; retailers make about 1 cent per gallon. Pilot is both a distributor and a retailer, so we can estimate its profits are about 5 cents per gallon.

Pilot sold six billion gallons of fuel nationwide in 2015; that would produce about $300 million in profit.

So Pilot’s $162 million fraud admission has cost them over one half of a year’s profit.

This is where Governor Billy has figured out how to rescue Pilot using our money.

Here’s how it works:

When Pilot sells its fuel, the federal, state and local fuels taxes are included in the price. Pilot collects the monies from us when we buy the fuel and then pays the governments. But in Tennessee the fuel taxes are not due to the state until 20 days after the month in which the fuel is sold. https://www.tn.gov/revenue/article/motor-fuels-taxes-due-dates-and-tax-rates.

With inputs from some financial experts, TL feels confident estimating that Tennessee fuel sales by Pilot may be as much as eight percent of total Pilot volume, i.e., 480 million gallons.

Haslam is proposing a 7 cent increase per gallon of gas and a 12 cent increase per gallon of diesel (or on average, 10 cents per gallon of total fuel sales).

Ten cents per gallon times 480 million gallons = $48 million in Tennessee fuel taxes collected from Tennesseans. This effectively adds $48 million to Pilot’s cash flow; how convenient when the fraud costs are $162 million and counting.

Governor Billy recently put up a smoke screen to hide this personal benefit by shrugging off the effects of the tax increase by saying this is only a $4 tax increase per month for Tennesseans, i.e., no big deal.

This is the same explanation liberals use to justify any new or increased retail tax.

So as we conservatives knew all along, Haslam’s gas tax increase is much more than roads and bridges because it also uses Tennesseans to pull Pilot’s bacon out of the fraud fire.

But wait! There’s more!

Of course, $48 million from Tennesseans’ pockets is not enough to cover the $162 million in fraud costs; but never fear, Jimmy Haslam’s college roommate, Bob Corker, will help get the Pilot fraud balance covered from Americans in the other states where Pilot operates..

More on that scheme coming up.