Feds Need Strategy for Excise Diesel Tax Money: CTA
TORONTO— Now that the Canadian economy is returning to health and the federal government’s finances are expected to shift from deficit to surplus, the Canadian Trucking Alliance (CTA) says it’s time for the feds to lower the excise tax on diesel.
“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,” says 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.”
The CTA wrote to the House of Commons Standing Committee on Finance, to say:
- It’s been six years since Prime Minister Stephen Harper promised during the 2008 election campaign to reduce the excise tax on diesel fuel by 50 percent (from four to two cents per liter);
- The tax was originally meant as a temporary measure to help pay down the deficit when it was introduced in 1985;
- Today, the tax serves no policy purpose;
- The trucking industry pays the bulk of the $1-billion the tax generates per year;
- Revenues from the tax do not go towards infrastructure, environment, etc., but flow into general revenues;
- Federal finance minister Joe Oliver should decide what to do with the federal excise tax on diesel fuel when he tables his first budget in 2015.
“At the same time as we anticipate a return to fiscal balance, diesel fuel prices have been running close to record highs,” Bradley says. “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,” Bradley says. “The federal government has a long history of providing assistance for highway construction in Canada, but this has been ad hoc and unpredictable.”
CTA suggests the money could be spent to:
- Create a National Highway Trust Fund, which in turn could be used to leverage provincial cooperation and compliance with national safety, weights and dimensions, environmental and other trucking standard;
- Retrofit existing trucks or to equip new vehicles with proven add-on technologies and devices, such as aerodynamic fairings, auxiliary power units, boat-tails and rolling resistant tires, to improve fuel economy while setting the industry up to comply with a new round of GHG reduction rules in 2018;
- Establish a distribution network, boost the manufacturing sector and lower capital costs of purchasing LNG engines. In general, the capital cost allowance (CCA) rate for truck tractors in Canada is far less generous than in the U.S.;
- Train truck drivers.
“There is going to be a greater need for quality driver training than ever before,” Bradley says.
According to the Conference Board of Canada, the for-hire trucking industry is facing a long-term, chronic shortage of qualified drivers of up to 33,000 by 2020.
“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,” he adds.
Consultations on the next federal budget will continue throughout the fall. The budget is usually introduced in February or early March.