Smaller carriers could be impacted most from Manitoba's carbon tax plan
May 2, 2018
WINNIPEG, Man. — The Manitoba Trucking Association (MTA) is concerned smaller carriers could struggle with the added costs of the province’s new “made in Manitoba” carbon tax plan.
MTA executive director Terry Shaw said though some larger trucking companies may “have a bigger stick” when it comes to negotiating the extra costs, smaller fleets will face a pair of hurdles: the challenge of passing on the increased fuel costs to customers and owner-operators looking for increased fuel compensation.
“No one faults folks wanting their increased costs covered,” said Shaw, “but if the customer isn’t willing to pay more, then these companies are put in a difficult position with their drivers.”
Provincial carriers will also face challenges competing with trucking companies residing in the U.S., according to Shaw, where such taxes are not imposed on fleets.
The Manitoba government’s carbon tax plan kicks in this September at a price of $25 per ton, a level Sustainable Development Minister Rochelle Squires said is half the amount mandated by the federal government giving the province the second lowest carbon price in Canada by 2022.
“When it comes to addressing the challenges of climate change, we must understand just how unique we are as a province,” said Squires. “This plan sets out a made-in-Manitoba solution to climate change that respects our clean energy investments, supports our economy and reduces emissions. It will protect the environment while also building a prosperous low-carbon economy in Manitoba.”
The government said its plan will save Manitobans and businesses over $260 million over the next five years compared to the federal plan.
“Our Made-in-Manitoba Climate and Green Plan will cost less and reduce more than the made-in-Ottawa carbon tax,” said Premier Brian Pallister. “Our lower carbon price respects the massive hydro investments Manitobans have made over decades to build one of the cleanest electricity systems in the world.”
The carbon tax will result in a 6.7-cents-per-liter increase on diesel at the pumps, which the MTA said equates to an estimated $50 million in fuel tax paid by heavy diesel vehicles in Manitoba, in addition to the $318 million the province already collects in fuel taxes from the industry.
The MTA had been in talks with the government, which has been in office since April 2016 after ending the NDP’s 17-year run, over the carbon tax plan and its potential impact on the trucking industry.
“We’ve been involved from day one in helping this government craft that plan, helping them understand what trucking means to the economy and what trucking means in terms of environmental impacts,” Shaw said. “We’re using the most efficient vehicles currently available, they just happen to consume diesel, and that’s not going to change any time soon, so wanting that to change, or planning on the fact that that will change, is an invalid plan.”
Shaw said the federal government’s carbon tax plan, which would have started at $10 per ton and increase each year to reach $50 per ton after five years, would have been unmanageable from an industry perspective.
“There’s no cost certainty with that, and how do you budget for it?” questioned Shaw. “You go from $10 a ton to $50 a ton, it’s like a 400% increase over five years for trucking on one of our largest individual cost components. That’s just unmanageable.”
While MTA members would have preferred no added tax, Shaw said the government contended that remaining at $25 per ton, with proceeds going toward programs aimed at reducing greenhouse gas emissions, will protect Manitobans from moving beyond that level and into the higher federally mandated pricing structure.
However, instead of reinvesting carbon tax revenues into greenhouse gas reducing programs, such as the GrEEner Trucking Efficiency Initiative, the MTA said “the government has clearly stated that carbon tax revenues will be directed toward income tax and other cuts.”
“Our members believed that if a tax was going to be implemented,” Shaw said, “seeing our industry’s tax revenues reinvested in our industry on efficiency initiatives would mitigate the cost impacts of the tax.”
The MTA has been informally advised by the provincial government that something is coming for trucking, and Shaw said they will actively pursue the government to ensure that commitment comes to fruition.
Under the new provincial carbon tax plan, agricultural emissions, as well as marked fuels used by farmers for their farming operations, are exempt.
The government also said large industrial emitters will be able to reduce their emissions while having their competitiveness concerns addressed through an output based pricing system of performance standards, offsets, and credit trading.
“Our vision is to make Manitoba the cleanest, greenest and most climate-resilient province in Canada,” said Pallister. “We are charting that course with a comprehensive plan based on Manitoba needs and focused on Manitoba priorities.”
MTA board members discussed the new Manitoba carbon tax policy and its next step to address the plan during the association’s April 6 board meeting.