QUEEN’S PARK, Ont. – Ontario Finance Minister Jim Flaherty, has given the green light to new sales tax laws for all Ontario fleets and O/Os inked to the International Registration Plan (IRP).

Previously referred to in Truck News as the Multijurisdictional Vehicle Tax, the plan will see the eight per cent Provincial Sales Tax (PST) paid on new equipment decline by 20 to 40 per cent. The Ontario Trucking Association (OTA) estimates this will result in a savings of more than $15 million industry-wide.

Ontario will abandon charging PST on trucks, trailers, and repairs at the time of purchase, in favor of a new Annual Pro-Rated (recurring) Sales Tax for vehicles registered under the IRP.

Under the new regime, an annual levy will be applied to all IRP-registered power units. Trailers and repairs made on IRP-registered tractors will be exempt from sales tax. In addition, all out of province trucks operating in Ontario will also have to pay the Annual Pro-Rate (Recurring) Sales Tax based on their Ontario IRP miles.

OTA president David Bradley commends the ministry, “for staying true to the government’s commitment to reduce the tax burden on Ontario businesses and for being receptive to reasonable and well-researched proposals for change.”

He adds this latest dialogue will open the door to an examination of the way business inputs are taxed in service industries like trucking, as compared to the manufacturing sector.

Ontario’s plans to implement an Annual Pro-Rated (Recurring) Sales Tax were first made known publicly in this past spring’s provincial budget.

Since then, lobbying efforts by the OTA and other groups, including the National Truckers Association, succeeded in securing an 11 per cent reduction in the proposed tax rate for the first three years, reflecting the amount of additional dollars to be raised from U.S. carriers.

This revenue-neutral charge for the province was reported in the September issue of Truck News. Since then, however, the OTA has managed to get the proposed credit system changed because it would have meant higher taxes on existing equipment. Consultations over the past several weeks have led to the development of a fairer credit system, in the eyes of the fleet group, for all vehicles regardless of age.

The association will be holding seminars around the province starting in the second week of October to assist carriers in understanding how the new tax will work and its administrative requirements.

“We told the minister that joining IRP was something that Ontario had to do in order to ensure access to the U.S. market,” says Bradley. “The province and the industry really had no other choice. I think the minister appreciated the distinction.”