OTTAWA, Ont. — Prime Minster Stephen Harper has announced that if re-elected, he will cut the four cent per litre federal excise tax on diesel in half.
The tax cut would be phased in over four years, Harper said. The move flies in the face of the federal Liberals’ Green Shift plan, which would increase the federal diesel tax by seven cents per litre. Harper said the Conservative plan would keep the prices of consumer goods in check, while helping the transportation and manufacturing industries.
“At a time when Canadians are concerned about affordability, and energy prices are rising, we should be doing what we can to lower prices,” Harper said. “This tax reduction will benefit consumers who buy virtually anything that moves by truck, train, ship or plane.”
The tax cut would also include aviation fuel, according to Harper. The Canadian Trucking Alliance (CTA) has been a vocal critic of the Liberal Green Shift plan, and the federal excise tax on diesel in general. The tax generates over $1 billion per year. Harper’s proposal would represent a tax cut of $600 million per year on diesel, the Conservatives claimed. Meanwhile, the CTA has said the Liberal Green Shift plan would increase the cost of operating a truck by $1,700 per year.
“This is a choice between two very different plans,” Harper said. “We want to reduce the tax on diesel a bit. Others plan to increase the tax on diesel significantly. In fact, they plan to increase the price of everything.”
“On a policy level, the choice is a modest, affordable reduction in the tax on diesel, or a massive carbon tax that will increase the cost of everything,” added Harper. “On a broader level, the choice is between two opposite plans for the economy and for leading this country during uncertain times.”
The announcement quickly drew praise from the CTA.
“Excise taxes on business inputs are an archaic and regressive form of taxation that should have been repealed or reformed back when the GST was introduced,” CTA CEO David Bradley said. “It’s taken a long time, but finally someone is listening.”
He added the change would bring “modest” help to truckers while lessening the “upward pressure on the price” of consumer goods.
“A two cent per litre reduction in the excise tax will not solve all our problems but it would be an important step in the right direction,” said Bradley, adding it could result in a fuel savings of $1,600-$1,800 per truck per year. Industry-wide fuel tax savings could amount to $140 million, according to the CTA.
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