For motorists in British Columbia, the news could not have come at a worse time. Just as most North Americans were reeling from soaring gas prices brought on by war in Iraq and a strike by Venezuelan oil workers, the province said it was tacking on 3.5 cents to the cost of a litre of gas.

It’s never a good time to increase fuel taxes, B.C. Premier Gordon Campbell noted, but it couldn’t be helped. According to the B.C. Ministry of Transportation, a deficit in 2001/02 of
$238 million meant more money had to be raised to pay for future highway projects.
And the docket is full of highway projects.

Speaking at the British Columbia Trucking Association in June, Campbell said repairs to the province’s highways are necessary to stimulate the resource industries that drive the B.C. economy.

They’re also needed now to keep a lid on future road-related costs. “When we don’t provide the kind of maintenance and rehabilitation that’s necessary, costs escalate,” Campbell said. “They escalate substantially. For one kilometre of road to be rehabilitated within the first 12 years of its life costs around $65,000. After 20 years, it’s about $400,000. How do we deal with improving our road infrastructure in a way that’s financially sound … so our forest industry, our mining industry, our agriculture industry, our energy industry all have a competitive advantage because of our investments in transportation?”

The answer: hike fuel taxes and dedicate the difference to roads. The springtime increase is expected to generate $650 million between now and 2006.

“All of those dollars are going to transportation,” Campbell said. “We are the only province to dedicate a transportation fund to road improvements. The reason we did that is because we know we face a choice. We know we need the infrastructure” in order to open up trade lanes to the province’s resource industries.

Over the next three years, the province has budgeted $93 million to upgrade border infrastructure and $609 million to fix rural side roads and routes into oil and gas projects.
“Even with that 3.5 cents, we’re not going to have the kind of resources we need to do all the things we want to do,” Cambell added. “Currently, we give about $800 million a year (in fuel tax revenue) to the federal government. “Historically, we get one per cent of that back. We have to get those dollars back for transportation.” He wants Ottawa to split the $670 million it will take to four-lane the treacherous Trans-Canada Highway through the Kicking Horse Canyon between Golden and Yoho National Park, calling it his government’s “top transportation priority.”

What Campbell didn’t talk about were road and bridge projects in and around Vancouver, because there aren’t any directly attributable to the 3.5-cent tax hike. In fact, when Campbell addressed plans in the Lower Mainland, he used words like “public-private partnership,” and “tolls.”

It’s a sore point with BCTA president Paul Landry. Compounding concerns over the provincial fuel tax increase is the fact that the Greater Vancouver Regional District (GVRD), a council of municipal governments, enacted a two-cents-a-litre fuel tax on April 1, 2002. This means truck operators in the GVRD, where 70 to 80 per cent of the carriers in the province do business, have seen their fuel taxes increase by more than 35 per cent in less than a year and now pay the highest fuel taxes in North America.

Landry questions whether the Ministry even has the facts right on its claim of a fuel tax deficit. It’s true the government took in $542 million in fuel taxes in 2001/02, and that it spent $780 million on highways and roads during that period. But what about the $350 million in vehicle licensing fees and more than $40 million in tolls from the Coquihalla Highway collected that year? If that money isn’t a road user tax, Landry asked, what is it?

“We appreciate the government showing some leadership and initiative,” he said. “We just want to remind them that we are taxpayers, we’re paying our fair share of taxes, and we want to see our tax dollars at work. We don’t want the government trying to hoodwink us with smoke and mirrors, like saying there’s a gap between what the government takes in and what it spends. That’s hogwash.”

While acknowledging that fuel tax revenues last year totalled nearly $912 million, a Ministry spokesman pointed out that, among other things, public transit costs, amortization, and interest charges on previously financed works added another $312 million in transport-related costs. (Landry takes issue with the inclusion of amortized debt, calling it “basically a book keeping concept that doesn’t involve cash in and cash out.”)

How badly are carriers hurt by these tax increases? A typical five-axle-tractor trailer running 160,000 kilometres a year in B.C. pays almost $10,700 in fuel taxes, Landry pointed out. The latest fuel tax increase adds another $2,500 a year. Many carriers will not be able to pass this on to their customers. “We heard from a carrier this morning who says he did the math and needs a 14- per-cent fuel surcharge,” Landry said. “He’s getting four per cent.”
Unlike long-haulers who fuel up outside the province or at least outside the GVRD, local owner-operators and small fleets “are really getting nailed on this,” said Landry, “because all of their miles are in B.C. They catch the full effect of the tax increase.”

The situation is not helped, he added, by the fact that fuel taxes, registration fees, and other taxes paid by road users are funding public transit links in the name of “transportation improvements.” Landry also thinks the province is giving the industrial areas of Vancouver short shrift and points to $600 million tagged for improvements to the Sea-to-Sky Highway. Though seen as vital to Vancouver’s 2010 Olympic bid, the amount seems wildly out of proportion to needs in the rest of the province.

“Look, we have a lot of highways, a lot of congestion in the Lower Mainland. We need the Port Mann Bridge fixed. We need the Massey Tunnel fixed. We need massive investments in terms of other highways throughout B.C….When you look at the $600 million and you look at the total amount of investments in terms of the minister’s announcement, that’s a lot of money committed to the Sea-to-Sky Highway.”

David Kosub is a transportation writer based in Victoria, B.C. He is a regular contributor to Today’s Trucking.The B.C. government’s plan to lease the Coquihalla Highway–the 195-kilometre toll road linking the Vancouver area with the province’s Interior region–has raised pockets of public opposition. It’s also generated bids from 28 businesses that want the 55-year contract to operate and maintain the highway for a one-time cash payment.

It could be a profitable venture: the Coquihalla generates $40 million a year in toll revenue yet will need about $14 million a year in maintenance over the life of the deal. Calling the highway an “alternate route” used chiefly by vehicles from outside the Interior, B.C. Premier Gordon Campbell (above) explained his government’s motive to members of the British Columbia Trucking Association at their convention in Kelowna in June.

“When we look at the opportunities in front of us, right now we have transportation requests in the order of $600 million dollars in this part of the province. And frankly, if we live within our means, we can’t even come close to satisfying those needs.

“We can pretend that we don’t have to pay for these projects, or we can work with a shorter menu of improvements. Some people have said to me, Gee, you all know that the public sector can borrow cheaper than the private sector. Borrowing is not the only challenge. … The private sector is pretty good at delivering things cost effectively. I think our job is to get the most cost-effective return for the dollars we invest.”