OTTAWA, Ont. — The Canadian Trucking Alliance has expressed its objection to the Liberal Party of Canada’s carbon tax plan, choosing instead to support emission-reducing incentives.
“The last thing the trucking industry needs is more tax on diesel fuel,” says CTA chief David Bradley. “With diesel fuel prices at record highs and fuel overtaking labour as the number one component of operating cost, the trucking industry does not need further price signals from government to know that improving fuel efficiency, and thereby reducing GHG emissions is a good thing.”
Dubbed a “green shift,” the purported “revenue-neutral” plan proposes to shift part of the burden of taxation away from income and towards pollution. That plan would have every dollar raised from taxing carbon pollution returned to Canadians in tax cuts or through increased spending for certain social programs. The CTA expects that the green shift will likely be the centrepiece of the federal Liberals’ next election platform.
According to the plan, the initial price for carbon will be set at $10 per tonne of greenhouse gas emissions and will rise by an additional $10 per tonne each year, totalling $40 per tonne within four years. It’s a CTA-opposed strategy that puts a price on carbon emissions and is intended to influence individuals and businesses to make decisions that will reduce polluting activities. The carbon tax would apply to home heating oil, jet fuel, kerosene, natural gas, propane, coal, and diesel fuel.
Gasoline would not be subject to a carbon tax, states the CTA, because the current federal excise tax on gasoline of 10 cents per litre is “supposedly” equivalent to $42 per tonne of GHG. In addition, since diesel and aviation fuel are already taxed at four cents per litre, the carbon tax on these fuels would see no increase in the first year of the plan. In the examples provided in the Liberal’s plan, the federal tax on diesel fuel would rise by an additional seven cents per litre by the fourth year or 4.9% compared to current prices, according to the CTA.
“I appreciate the theoretical underpinning of a carbon tax, of pricing externalities,” says Bradley, who is trained as an economist. “I could probably even design a carbon tax that the trucking industry would find palatable, and that would actually help the industry improve its fuel efficiency, but this plan will simply make freight transportation in Canada more expensive, impairing Canada’s competitiveness and impeding investment in fuel efficiency.”
Bradley notes that the trucking industry already has a four cent per litre federal excise tax on diesel fuel, which he believes serves no policy purpose whatsoever other than to raise cash for the federal government.
“They could, for example, make that tax a carbon tax, and earmark the revenues generated by it, to assisting the industry in its efforts to accelerate the penetration of the new generation of smog-free trucks and fuel efficiency technologies, into the marketplace. That is what our enviroTruck initiative is all about getting the new things that can have a profound impact on lowering smog and GHG emissions into the fleet, quicker. Taxing diesel fuel is not going to help that process; it’s only going to make it more difficult for carriers.”
Bradley states that truckers have a different view of what tax revenue-neutrality means, compared to what is espoused in green shift. “There is no tax neutrality for truckers in this plan,” he contends. The plan itself estimates that the end of the fourth year “the average freight trucker’s total annual operating expenses (will be increased by) approximately $1,700 per year.”
The proposed modest reductions in corporate income tax rates will do little to offset the impact of a carbon tax in a low margin business like trucking, adds Bradley. In addition, the plan proposes to accelerate CCA write-offs for “green technologies,” investments that would help the trucking industry to conserve fuel auxiliary power units, aerodynamic fairings, wide-base single tires, and the other components of an enviroTruck, which are not currently eligible for faster CCA treatment.
“The tax system is geared to providing incentives to other industries, not trucking,” Bradley contends.
The Liberal’s green shift plan does not state how, or if, it intends to collect the carbon tax from US carriers, states Bradley, who adds that it is possible that US trucks will be exempt, which will exacerbate the tough competitive position that Canadian truckers are already in, given the high dollar and shrinking trade surplus.
“On any given day, about 30% of the transport trucks on Canada’s major trade routes are from the US; a carbon tax that applies only to Canadian trucks would have a profound impact on our industry’s competitiveness, and would do nothing for the environment.”
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