Every family in British Columbia is going to be ahead of the game at the end of the tax year. If this is the provincial government's view on the impact of the carbon tax, there is only one logical que...
July 1, 2008
Paul Landry President And CEO British Columbia Trucking Association
Every family in British Columbia is going to be ahead of the game at the end of the tax year. If this is the provincial government’s view on the impact of the carbon tax, there is only one logical question -what does “revenue-neutral” actually mean, anyway?
In a revenue-neutral situation, either everyone comes out even or some people receive more than they pay. The government has chosen an impossible third definition: everyone gets more than they pay. But families in the trucking industry will be net payers by a substantial margin. Because diesel fuel comprises the largest portion of operating costs, the trucking industry -responsible for transporting everyday necessities for consumers, manufacturers, exporters and importers -will be paying an excessive portion of the tax.
The BC Trucking Association (BCTA) estimates that the carbon tax collected from the industry will amount to about half a billion dollars in the first five years. This is a conservative estimate because we’re assuming no change in consumption over the five-year period. That assumption goes against recent historical figures that show that the industry grew at a rate slightly faster than the overall economy.
On a more personal scale, this means an “average” long-haul owner/operator will pay $1,000 in 2008, $3,000 in 2010 and $6,000 in 2012 in carbon taxes. In 2008, the same owner/operator can expect to get back between $20 and $51 in personal income tax cuts, plus the $100 carbon tax cheque per family member. If that same owner/operator lives somewhere in the province where public transit isn’t an option, he’ll be paying carbon tax for other forms of fuel for a personal vehicle, as well as for home heating and/or natural gas. So by anyone’s calculation, an average owner/operator with a spouse and two children will get the highest payback in 2008 when the carbon tax is only being charged for six months and the one-time $100 cheques are in the mail. In the future, this owner/operator will be receiving literally two or three cents back for each dollar in carbon tax paid. The situation isn’t much differ- ent for the vast majority of trucking companies that pay small business or corporate business taxes. Does this sound revenue-neutral?
Anyone with even a rudimentary knowledge about economics would counter by saying that cost increases like the carbon tax and escalating fuel prices should be passed on directly to the customer -the one who arranged the service in the first place. This is where theory and reality diverge. When customers are very large, have fixed contracts or are in difficult financial circumstances themselves -the forestry industry, anyone? -“passing on” cost increases is, to put it mildly, a challenge. Even if the trucking industry could pass on the carbon tax, how does this reduce greenhouse gas emissions -the underlying rationale for this exercise?
A tax that, by the government’s own admission, is too low to incent a behavioural transformation, must be accompanied by a full and robust menu of policies and programs that encourage or support the change in other ways. For the trucking industry -struggling with miniscule margins and often dependent on cash flow for purchases -the menu has to include reliable information about fuel-saving technologies and redirecting the carbon tax into financial support to make those necessary purchases. Given the amount of tax that’s projected to be collected from the industry, this isn’t asking for much. In fact, it’s a potential win-win situation where the provincial government, if it is serious in its goal to reduce emissions, could really put the carbon tax to work.
BCTA is the recognized voice of the provincial motor carrier industry, representing about 800 truck and bus fleets and 250 suppliers to the industry. Over 13,000 vehicles are operated by BCTA members in B. C. BCTA operating members employ 26,000 people in B. C. and generate over $2 billion in revenue in the province annually. As an EPA Smartway Transport Partner, BCTA is committed to helping its members find ways to increase energy efficiency while significantly reducing greenhouse gases and air pollution.