DIVISIVE ISSUE: Fuel taxes have emerged as a key election issue, with the Conservatives and Liberals announcing contrasting policies.
OTTAWA, Ont. –Prime Minister Stephen Harper has announced that if re-elected, he will cut the four cent per litre federal excise tax on diesel in half.
His Liberal counterpart Stephane Dion, meanwhile, has altered his party’s controversial carbon tax scheme to make it more trucker-friendly. Both announcements came as the federal parties launched their campaigns for the Oct. 14 federal election.
Harper’s tax cut would be phased in over four years, the PM announced during a campaign stop in Winnipeg Sept. 9. The tax cut contrasts the federal Liberals’ Green Shift plan, which would increase the federal diesel tax by seven cents per litre over four years. Harper said the Conservative plan would keep the prices of consumer goods in check, while helping the transportation and manufacturing industries.
“At a time when Canadians are concerned about affordability, and energy prices are rising, we should be doing what we can to lower prices,” Harper said. “This tax reduction will benefit consumers who buy virtually anything that moves by truck, train, ship or plane.”
The tax cut would also include aviation fuel, according to Harper. The Canadian Trucking Alliance (CTA) has been a vocal critic of the Liberal Green Shift plan, and the federal excise tax on diesel in general. The tax generates over $1 billion per year. Harper’s proposal would represent a tax cut of $600 million per year on diesel, the Conservatives claimed. Meanwhile, the CTA has said the Liberal Green Shift plan would increase the cost of operating a truck by $1,700 per year by the fourth year.
“This is a choice between two very different plans,” Harper said. “We want to reduce the tax on diesel a bit. Others plan to increase the tax on diesel significantly. In fact, they plan to increase the price of everything. On a policy level, the choice is a modest, affordable reduction in the tax on diesel, or a massive carbon tax that will increase the cost of everything,” added Harper. “On a broader level, the choice is between two opposite plans for the economy and for leading this country during uncertain times.”
The Conservatives’ announcement quickly drew praise from the CTA.
“Excise taxes on business inputs are an archaic and regressive form of taxation that should have been repealed or reformed back when the GST was introduced,” CTA CEO David Bradley said. “It’s taken a long time, but finally someone is listening.”
He added the change would bring “modest” help to truckers while lessening the “upward pressure on the price” of consumer goods.
“A two cent per litre reduction in the excise tax will not solve all our problems, but it would be an important step in the right direction,” said Bradley, adding it could result in an annual fuel savings of $1,600-$1,800 per truck. Industry-wide fuel tax savings could amount to $140 million, according to the CTA.
The association was not nearly as supportive of the Liberals promise that it would modify its carbon tax plan to earmark funds the transportation industry could tap into to pay for the adoption of ‘green’ technologies.
The Green Shift revisions would set aside $250 million for the Green Fisheries and Transportation Fund over four years. That money would be used to encourage the use of environmentally-friendly technologies such as APUs, side fairings and fuel-efficient tires.
“Through the summer, Canadians came with good ideas to improve the Liberal Green Shift plan, to make it stronger, and we listened,” said Dion.
However CTA’s Bradley said the changes fall short, especially when dispersed over four years among every transport mode as well as the fisheries industry.
“When the Liberal proposal is looked at over four years and spread across all the freight modes and the fisheries industry, it is unclear how much will really be available for the trucking industry,” Bradley pointed out. “The trucking industry is already making the shift to smog-free engines, ultra low-sulfur diesel fuel and proven and available GHG-busting technologies and devices.”
The CTA says the Green Shift plan will add seven cents per litre to the cost of diesel by year four, and will add about $1,700 to the cost of operating a truck.
Collectively, it would cost the Canadian trucking industry as much as $500 million per year, according to Bradley.
When viewed in tandem, the Conservative and Liberal plans represent a nine cent per litre swing in the cost of diesel by the fourth year.
For our editors’ take on the issue, see the editorials on pg. 6.