Diesel tax cut unlikely to affect consumers

SASKATOON — While Prime Minister Stephen Harper’s vow to cut the diesel tax is a step in the right direction, consumers are unlikely to see any difference at the retail level.

Harper‘s decision to cut the 4-cent-a-liter federal tax back to 2 cents drew elated responses from the much of the trucking industry.

The Canadian Trucking Alliance has spent years lobbying for the abolishment of the excise tax, calling it a "repugnant and regressive," form of taxation, implemented by Brian Mulroney’s Tories to end the deficit, which has since been eliminated and replaced with year-over-year surpluses.

"In recent years, the tax has served no policy purpose whatsoever," said CTA boss David Bradley, who adds that he will push for the remaining two cents to be scrapped as well. The carrier group estimates the announcement would save the industry about $140 million in tax or about $1,700 annually per truck.

Manitoba Trucking Association GM Bob Dolyniuk says the tax reduction won’t solve all of the industry’s cost-related problems, but is a "great first step forward."

It’s a sentiment now being echoed by others in the industry. At a time when the trucking industry is counting its profits in pennies, Bryan Richards, vice-president of business development with Yanke, says consumers will be unlikely to see any difference in the products on shelves.

“Of course we’re happy to see the tax move in this direction and the money we’ll save every month will be important,” Richards explains. “But the magnitude of change would have to be quite a bit larger before the consumer saw anything.”

Richards notes the Saskatoon-based Yanke fleet will save about $20,000 if the tax is cut in half, but most of that is part of a fuel surcharge program anyway. He predicts that with much of the industry haggling with shippers over fuel surcharges this cut in the excise tax will likely just ease those negotiations.

Barry Prentice, a professor of supply chain management at the University of Manitoba, took a similar stance. The Winnipeg Sun reported him as saying a cut will be good for the trucking industry but its overall economic effect will likely be minimal.

"It cannot hurt when it happens, if it happens, but it also will not help very much," Prentice said. "(The trucking industry) could use the help. But the impact of this change is clearly to gain political points, rather than to make any significant change in the cost of transportation and hence the buoyancy of the economy."

— with files from the Winnipeg Sun

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