Diesel hit hard in Federal Excise Tax changes

by Today's Trucking Staff

TORONTO, ON – Planned changes to the Federal Excise Tax (FET) on diesel fuel would eliminate exemptions for Temperature Control Units like reefers, Auxiliary Power Units, bunk heaters, and Power Take-Off units. And that threatens annual refunds of $800 to $1,000 per tractor-trailer as of July 1, according to the Canadian Trucking Alliance (CTA).

“I am extremely disappointed,” says chairman Gene Orlick. “The decision to drop this rebate is because another industry [airlines] abused the system, making unique claims for lighting and other electricity in their operations.”

When the Federal Excise Tax was first added to diesel in 1982, it was only meant to be applied to transportation fuel, according to a CTA briefing note citing new language in the federal budget’s Notice of Ways and Means Motion.

“Excise taxes are generally intended to be imposed on luxury products such as jewelry, tobacco and alcohol. Excise taxes are not meant to increase the cost of basic provisions such as food, pharmaceuticals and shelter,” the CTA adds. “Eliminating FET refunds on temperature controlled and PTO units will increase the transportation cost of the food and other important products Canadian families rely on.”

The fuel used to heat a building that stores such goods will not be subject to the tax. Put the storage on wheels and it’s a different story. And while the diesel used to control in-cab temperatures will be affected, the fuel used for residential heating or generating electricity will not. “For many truck drivers who drive across the continent, their truck cabin is their shelter and home,” CTA says. “The proposed amendments will result in diesel fuel used in APUs [Auxiliary Power Units] being subjected to the FET. This is wrong.”

While the Canada Revenue Agency struggled to audit the claims made by other industries, equipment like that cited by CTA has separate fuel tanks and meters, making auditing possible.

“If there are problems with a particular sector and technologies, [the Department of] Finance should identify them and impose sanctions directly on those sectors, rather than lump in trucking under a blanket policy,” the CTA briefing note says.

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