Let me tell you how it will be
There’s one for you, 19 for me
‘Cause I’m the taxman
Yeah, I’m the taxman – The Beatles
There was no love lost between the Fab Four and keepers of the U.K. treasury. You can hear it in the lyrics of Taxman, penned by George Harrison with some help from John Lennon, when The Beatles were paying more than 90% of their earnings into public coffers.
Few of us fall into tax brackets like that. Certainly not the writers employed by trucking magazines. But every April Canadians are reminded of the taxes they do pay, when they enter the figures from T4 slips into personal income tax returns that come due at the end of the month. (This year they’re due May 2 because the last day of April is a Saturday.)
In the world of trucking, such taxes play a central role in the so-called Driver Inc. business model that sees employed drivers misclassified as contractors.
But a tax credit proposed by two U.S. legislators could — if mimicked and applied by Canada’s federal government — help ease the Driver Inc. challenge and even encourage more people to take up trucking as a career.
Specifically, U.S. representatives Abigail Spanberger and Mike Gallagher are proposing a refundable income tax credit for qualified commercial truck drivers south of the border.
Their Strengthening Supply Chains Through Truck Driver Incentives Act would create a two-year credit worth up to $7,500 for U.S. truck drivers with a valid Class A commercial driver’s license (CDL) who drive at least 1,900 hours a year. It would also include a new refundable tax credit of up to $10,000 for those entering registered trucking apprenticeships. New truck drivers would even be eligible for a portion of the credit it they drive less than 1,420 hours in a year, but drive at least 40 hours a week.
The Spanberger-Gallagher legislation has already been endorsed by the American Trucking Associations, American Loggers Council, and Virginia associations representing trucking, farming, logging, and agribusiness.
Such an idea would also have merit in Canada for several reasons.
The Canadian truck drivers bamboozled into signing up for Driver Inc. pay structures tend to be fed false promises of tax deductions that only apply to legitimate businesses. Everything seems fine until a Canada Revenue Agency auditor comes knocking at their door and asks for the money.
But imagine if a credit was available only to those who are registered as fleet employees and issued a corresponding T4 slip.
Then there’s the matter of the ongoing search for truck drivers. Prior to the pandemic, data released by the Conference Board of Canada and Trucking HR Canada predicted Canada’s trucking industry would be short 55,000 drivers by the end of 2023. In the fourth quarter of last year, 23,000 such jobs were vacant.
Meaningful tax incentives could play a role in retaining existing drivers and recruiting would-be drivers who are balancing different career paths available to them. And linking such incentives to actual time behind the wheel would weed out those who earn a licence but ultimately decide trucking is not a job for them.
It wouldn’t be the first time that tax credits were used to meet a broader national objective. Look no further than the 2022 federal budget for proof. First-time home buyers will be able to save up to $40,000 under a new Tax-Free First Home Savings Account to come in 2023. And the adoption of zero-emission vehicles will be encouraged through a series of new purchase incentives for medium- and heavy-duty equipment.
Another advantage of such initiatives is that tax credits can come and go based on national interest. And there are few interests more pressing to Canada’s economic future than the need to recruit and retain a new generation of truck drivers.
A tax credit won’t solve every issue, but it would be a step in the right direction.
To quote some other lyrics from The Beatles: Money don’t get everything, it’s true. What it don’t get, I can’t use. Now give me money.
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