OTTAWA, Ont. — The Canadian Trucking Alliance has said Conservative finance minister, Jim Flaherty’s first federal budget has “goodies for everyone” including trucking companies.
“The budget is broad-based, energetic and on balance very positive,” said CTA CEO, David Bradley. “There is some much-needed corporate tax relief for our customers and for carriers; there is recognition that business inputs should not be taxed at all; and, there is a new highway and borders infrastructure fund. The government has definitely tried to cover all the base paths with regard to their priority areas.”
A slew of personal and corporate tax reductions were announced including: a reduction in the corporate income tax rate 20.5 per cent by Jan. 1, 2008 and 19 per cent by 2010; elimination of the corporate surtax by Jan. 1, 2008; and elimination of the federal capital tax Jan. 1 of this year two years earlier than initially scheduled. Small businesses will also enjoy an increase in the small business threshold along with a decrease in the tax rate, both starting next year.
The budget plan recognizes that “some provinces continue to impose retail sales taxes on capital expenditures” and says “complete elimination of provincial retail sales tax on business inputs by all provinces would significantly improve Canada’s chances in the international competition for investment, resulting in more jobs and growth.”
However, the minister did not eliminate the federal excise tax on diesel fuel a key and increasingly costly trucking business input.
“Excise taxation on diesel fuel is an outdated, regressive form of taxation that is especially harmful in low margin businesses like trucking,” Bradley says.
Excise taxes on fuel are not dedicated to any one purpose, but Bradley acknowledges that at least some of the money collected via excise taxes will find its way into the $2.4 billion, five-year highways and border infrastructure fund announced in the budget. According to Flaherty,” a great trading country like Canada must have the best in highway and border infrastructure.”
As part of what Flaherty labels “a long-term commitment of unprecedented new investment,” the new fund is designed “to help provinces and territories meet system needs.” The minister said a key objective “will be to cost share with provinces and territories improvements to the core national system, including the Trans Canada Highway.” The budget plan specifically includes an acknowledgement that 63 per cent of Canada’s trade with the U.S. moves by truck.
While CTA welcomes the highway and border initiative, Bradley says he hopes that it will be enough to leverage provincial investment and cooperation. Another $591 million over eight years, previously announced, is committed for the Pacific Gateway project.
Also related to the borders, the government will allocate $100 million to arm border officers and eliminating ‘work-alone’ posts. Another $303 million is earmarked to “implement a border strategy to promote the movement of low-risk trade and traffic within North America while protecting Canadians from security threats.”
Several measures are introduced to encourage the skilled trades including a new Apprenticeship Job Creation Tax Credit of up to $2,000 per apprentice, for each of the first two years of their contract. In addition, a new Apprenticeship Incentive Grant of $1,000 per year for the first two years of Red Seal and other apprenticeship programs.
One sector pulp and paper received accelerated CCA rates for investments in energy generation equipment that uses renewable energy like forest biomass, or uses fossil fuels more efficiently.
“In future budgets we hope to see the same sort of thinking applied to investment in the new, smog-free truck engines, and auxiliary equipment that will reduce greenhouse gas emissions and air pollutants,” Bradley said.
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