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Ontario budget foggy on specifics

TORONTO, Ont. -- The McGuinty government's first budget continues a commitment to road spending, but just how it wi...

TORONTO, Ont. — The McGuinty government’s first budget continues a commitment to road spending, but just how it will affect trucking remains unclear, says the OTA.

While the budget appears to tackle transportation issues in a positive manner, a proper assessment can’t be done until more details are provided, say association officials.

For example, the budget says amendments will be proposed that will save registrants money by switching the way interest is calculated on fees and taxes owed to Ontario and other jurisdictions by International Registration Plan (IRP) participants, such as trucking companies. (The way interest is calculated has been a longstanding concern of OTA.)

But the budget also announces several fee and charge increases, OTA officials point out, adding other than driver’s license fees, no announcements were made on the trucking side. OTA officials warn that does not mean that such announcements will not be forthcoming.

Association officials refer to the budget itself: "Further details of the major fee changes outlined in the budget, as well as other smaller fee changes, will be provided by the individual ministries responsible once arrangements and details are finalized."

At the budget lock-up OTA staff asked Finance officials if the trucking industry should expect fee increases. The answer was that the government would let all concerned parties know in the near future if such fees have been impacted. OTA officials say they will be seeking clarity on this issue from MTO.

One transportation fee hike specifically named in the budget deals with driver’s licenses. Effective September 2004 the driver’s license fee will be increased from $50 to $75 per five-year period. The portion of the driver’s license fee earmarked to the Motor Vehicle Accident Claims Fund will from $5 to $15 per five-year period.

Infrastructure Spending — while the budget continues the province’s commitment to highway spending – close to $1 billion dollars in highways for 2004-05 – the government’s announcement to dedicate two cents of the existing provincial gas tax to municipalities for public transit does not provide details as to how this dedicated tax will help reduce congestion that is choking the productivity of the trucking industry.

(This funding will be increased to 1.5 cents in October 2005, and two cents in October 2006). A distribution formula for this funding will be a subject for consultation in upcoming dialogue. OTA officials say they hope to be involved in these discussions.

Traffic congestion — The budget announces the creation of new bureaucratic entities and projects that will have a reported impact on congestion in the GTA and other areas of the province—- Greater Toronto Transportation Authority (GTTA), Strategic Infrastructure Financing Authority (SIFA), growth management plan for the Golden Horseshoe; and, a ten year strategic infrastructure plan. How all these initiatives and new entities will co-exist and impact highway spending and traffic flow is not known at this time.

Capital tax Some good news on this issue for the trucking industry, OTA officials say. Starting Jan. 1, 2005, the current $5 million deduction from taxable paid-up capital will be increased by 2.5 million each year until the deduction reaches $15 million on Jan. 1, 2008. By that time, in addition to small businesses that do not pay capital tax, more than 13,000 medium sized corporations would no longer pay capital tax. Starting Jan. 1, 2009, capital tax rates would be reduced each year until the capital tax is fully eliminated on January 1, 2012.

As for capital cost allowance for newly acquired computer and data network infrastructure, Ontario proposes to parallel the CCA changes announced in the 2004 federal budget.

Employer Health Tax Act (EHT) OTA officials say carriers should also note the budget says the existing Employer Health Tax Act (EHT) legislation will be amended so that as long as a person reports to work at a permanent establishment in Ontario, all of that employee’s remuneration is subject to EHT. This measure, pending appeal of an April 27, 2004 court case, would be retroactive to Jan. 1, 1990.

A myriad of changes were also made to the health care services in Ontario, some of which may impact carriers benefit packages including the OHIP delisting of such services as: optometry exams; chiropractic services and physiotherapy services.

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