OTTAWA — It’s "delightfully appropriate" that the federal Conservatives‘ announcement to slash in half the excise tax on diesel fuel comes during National Trucking Week, several leaders of Canada’s truck carrier community point out.
Prime Minister Stephen Harper’s decision to cut the 4-cent-a-liter federal tax back to 2 cents drew elated responses from the industry today.
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 that today’s announcement would save the industry about $140 million in tax or about $1,700 annually per truck.
"It’s taken a long time, but finally someone is listening," said Bradley in a press release. "…all other things being equal, the tax repeal could provide modest help in to lessening some of the upward pressure on the price consumer goods, foodstuffs and business inputs."
British Columbian truckers have special reason to celebrate today’s news. B.C. Trucking Association (BCTA) President Paul Landry says it will help ease the impact of his province’s 2.7-cent "carbon tax" on fuel, implemented this past July.
“The federal parties seem to understand that increasing the cost burden on trucking will simply increase the cost of transportation to consumers and businesses without reducing carbon emissions,” says Landry.
However, the relief is only temporary, he points out, as B.C.’s carbon tax will sharply rise to over 8 cents-per-liter in the next four years. And if the federal Liberals are elected this October and pass their controversial national "carbon tax" of 7-cents-a-liter on diesel, thousands of carriers and owner ops — especially on the west coast — will undoubtedly risk going out of business.
In many regions, diesel fuel now represents the trucking industry’s largest cost base, in some cases surpassing labor as carriers’ biggest expense in recent years.
The federal excise tax reduction will translate into a savings of about $31.4 million per year for diesel users in B.C., notes BCTA. In contrast, the carbon tax will cost the industry almost $500 million over the first 5 years.
Proponents of carbon taxes, both in B.C. and within the federal Liberal party, insist the tax is "revenue neutral."
Counter claims by industry that transport businesses and people in rural communities bear the brunt of the tax with only pennies in return, were recently echoed by Stephen Harper.
“Every politician in history who wants to impose a new tax claims that it’s either revenue neutral or it’s temporary. It’s not true. The reason politicians impose a new tax is they need revenue," Harper was quoted by the Globe & Mail.
In an interview this morning with todaystrucking.com, Manitoba Trucking Association GM Bob Dolyniuk said the tax reduction won’t solve all of the industry’s cost-related problems, but is a "great first step forward."
"It is an election promise. So we’re just getting out our clipboards here and keeping track of all these things."
He too commends Harper in going through with the tax cut, despite reported opposition from his Finance Department, which didn’t want to give up the $1 billion in funneled to federal coffers.
For that reason, Dolyniuk isn’t surprised the feds are reluctant to go whole hog. "It’s hard to give it all up."
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