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Feds need strategy for excise diesel tax revenue, says CTA

TORONTO, Ont. —  The Canadian Trucking Alliance (CTA) offered federal finance minister Joe Oliver some suggestions on what to do with the federal excise tax on diesel fuel when he tables his very first budget in 2015.

“The federal government will no doubt continue its prudent management of government spending, but with the recession behind us and with the books balanced, it will no longer be in a fiscal straitjacket,” said CTA president David Bradley. “It should therefore seek to introduce certain long-standing strategic measures that are consistent with the themes established for the pre-budget consultations.”

Recently, the CTA wrote to the House of Commons Standing Committee on Finance stating PM Stephen Harper pledged six years ago in 2008 to reduce the excise tax on diesel fuel by 50% from four cents a litre, to two cents a litre. This tax, said the CTA which was originally meant as a temporary solution to helped pay down the deficit when it came to be in 1985, still remains today with no policy purpose.

“At the same time as we anticipate a return to fiscal balance, diesel fuel prices have been running close to record highs,” said Bradley. “Although CTA would never dismiss a tax reduction – and while there is ample good reason to eliminate the regressive excise tax on diesel fuel and harmonize it with the GST/HST – as long as it continues to exist, it should be earmarked for specific policy purposes that are consistent with government and industry goals in areas like highway infrastructure, fuel efficiency and GHG reduction.

“Canada is perhaps the only major industrialized country on the planet not to have a national highway policy,” added Bradley. “The federal government has a long history of providing assistance for highway construction in Canada, but this has been ad hoc and unpredictable.”

The CTA suggests the revenue of the excise tax be dedicated to a National Highway Trust Fund, that could be used to leverage provincial cooperation and compliance. The revenue could also be used to retrofit existing trucks with technologies that improve fuel economy and comply with the GHG reduction rules in 2018. Or, the revenue could be used to develop a distribution network, improve the manufacturing sector and lower capital costs of purchasing LNG engines.

The Conference Board of Canada says the trucking industry is facing a long-term shortage of qualified drivers – up to 33,000 by 2020.

“There is going to be a greater need for quality driver training than ever before,” says Bradley. “This is yet another area where perhaps revenue from the federal excise tax on diesel fuel could be allocated to help create new jobs while increasing safety standards across Canada.”

The budget is normally introduced in February or early March.

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1 Comment » for Feds need strategy for excise diesel tax revenue, says CTA
  1. Wayne McMann says:

    The money from fuel taxes belongs in the roads as it was originally intended. It is a user fee as can be easily seen.

    Use the money to twin our national highway from coast to coast, from sea to shining sea.

    Increased safety and more efficient transportation with reduced costs.

    We all win.

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