OSHAWA, Ont. - When the new retail sales tax system associated with the International Registration Plan (IRP) was in the draft stage, National Truckers' Alliance of Canada (NTAC) co-founder Bill Wellm...
OSHAWA, Ont. – When the new retail sales tax system associated with the International Registration Plan (IRP) was in the draft stage, National Truckers’ Alliance of Canada (NTAC) co-founder Bill Wellman was not only satisfied with the deal, he took pride in the impact of his lobbying efforts. He then learned a valuable lesson: Never take your eye off proposed laws.
Also referred to as the Multijurisdictional Vehicle (MJV) tax, the new system was to help lighten the load of all would-be equipment owners – instead Wellman says only fleets will reap the rewards and small operators may even be penalized.
“I got busy for a month or so and some big changes were made behind my back,” complains Wellman. He alleges, thanks to last minute wrangling over the tax’s structure, only repairs and parts on equipment and the purchase of trailers has been made tax exempt.
“That means the power unit basically pays the tax on the trailer,” he says. “There’s no way an O/O can afford to pay the taxes,” so that much larger fleets can save money on their trailer bills.
Paul Lawson, a tax advisor in the Ministry of Finance’s Tax Exemption Office, confirms Wellman’s complaint.
“The tax is only applied to the tractor,” says the public servant. He adds there have already been a number of seminars arranged through the Ontario Trucking Association to help clarify any confusion created by the new rules. Tax guide 8.09 is also available by calling 800-433-6313, he adds.
But Wellman maintains the Ministry of Finance is confused if it expects O/Os to carry the tax bill for the entire industry.
“I’ve been talking to Finance Minister Jim Flaherty and I want an amendment done,” adds the frustrated O/O. “I’m suggesting some form of common contract.”
Such a contract would clearly lay out how much of the tax is to be paid by the owner-op and how much by the carrier, he insists.
This solution would fit with Lawson’s appraisal of the situation.
However, he adds, Wellman’s fears may not be completely justified. Since the tax is actually charged to the owner of the licence plates, in many cases the fleet would still be the one on the hook for any tractor taxes. “It’s applied to the one registered to the plates.”
The tractor-issue aside, the elimination of provincial sales tax (PST) has yet to translate into any extra trailer sales for at least one retailer.
“Even though these changes came into effect Oct. 1, the average trucker is just finding out about them now,” says Rob Moorehouse, a sales representative with Action Trailer Sales. “A lot of these guys still need to register for IRP before they qualify (for the tax exemption).” While he doesn’t expect a boom in sales he is hopeful it might convince a few folks to buy new equipment rather than used.
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