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Provincial proposal to raise fuel tax garners OTA reaction

TORONTO, Ont. – The transit Investment Strategy Advisory Panel will recommend a series of potential measures to raise $2 billion annually, the amount needed to fund the Metrolinx Big Move.

TORONTO, Ont. – The transit Investment Strategy Advisory Panel will recommend a series of potential measures to raise $2 billion annually, the amount needed to fund the Metrolinx Big Move.

Ontario Premier Kathleen Wynne announced that the advisory panel, which she appointed, that it will recommend a number of potential measures geared at generating revenue to fund the Metrolinx, an initiative established to contend with traffic gridlock in the Greater Toronto and Hamilton Area (GTHA).

The proposed measures, of which 75 per cent of revenues would be directed towards transit, include a 0.5% increase in the general corporate income tax rate and a redeployment of the GTHA portion of the province’s HST on gasoline and fuel taxes. Though, the primary recommendation is for a phased increase in gasoline and fuel taxes commencing with a 3-cent per litre hike in 2015, followed by an annual increase of 1 cent per litre, up to 10 cents over the next seven years.

The tax increases would apply on a provincial basis and would go into “a dedicated, transparent and accountable trust fund.”

 Although it was not specified in the report issued today, panel members have since indicated that 54% of the monies going into the fund will pay for transit in the GTHA while the remaining 46 per cent will fund infrastructure improvements, which could possibly include roads in the rest of the province.

The panel does not recommend the introduction of tolls at this time. The provincial diesel fuel tax, which currently sits at 14.3 cents per litre, was last raised in 1992.

The provincial government will deliberate and decided whether to adopt any of all of the recommendations put forward by the panel.

The premier has made reducing congestion in the GTHA one of her key priorities and indicated she is prepared to bring this battle to an election.

Transportation Minister Glen Murray said his ministry will review the panel recommendations and would decide which path to take by spring 2014. It is widely anticipated the government’s preferred approach will be contained in the spring budget, which could be the launching pad for an election.

 As the predominant user of diesel fuel, the trucking industry is being asked to take on a major new cost burden, said David Bradley, president of the Ontario Trucking Association. 

“We want to know a lot more about how the proposed investment trust fund will work and we want assurances that roads, highways and bridges will get their fair share of the dollars available from the GTHA transit fund,” said Bradley.

 The trucking industry is prepared to pay its fair share, said Bradley, provided there will be a return on investment. “We would much rather see our fuel tax dollars go into a dedicated fund specifically set up for roads, highways and bridges – the infrastructure truckers use. You can’t move goods via transit.”

 However, while no one likes to pay increased taxes – and fuel is the second largest component of most trucking companies’ operating costs – the industry also has to weigh that against the fact that congestion in the GTHA is exacting a toll on the economy and on people’s lives.

 “For us, it’s an economic issue – will the increased taxes actually take cars off the road and improve, or at least not make the situation worse in the future, as it pertains to goods movement? It sounds nice in theory but the industry will need to be convinced,” said Bradley.

 Bradley concedes that if carriers must pay more, a province-wide fuel tax is a fairer and more efficient way of getting all truckers, regardless of where they come from within Ontario to pay their fair share as opposed to a regional tax as initially proposed by Metrolinx which would have created a distortion in the marketplace. 

 Finally, Bradley said it is imperative the province closes a loophole in the Highway Traffic Act, which exempts thousands of specialty trucks (e.g., sucker/pumper trucks, crane trucks, etc.) from having to be plated and from paying fuel tax.

“These trucks use the infrastructure the same as every other truck and they should be expected to pay their fair share as well,” Bradley said.

 OTA estimates the province is losing out on about $60 million a year in registration fees and fuel taxes from these trucks.

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