2013 Canadian Trucking News — Where Should Diesel Taxes and Trucker Fees Go?

The trucking Industry pays for the registration of their vehicles and drivers at the same time that diesel fuel tax payments are collected, but where do these payments go? The Ontario Trucking Association has a message for the Transit Investment Strategy Panel:


Diesel fuel taxes and driver/vehicle registration fees paid by the trucking industry should be dedicated to fixing and expanding the province’s roads, highways and bridges, and must not be used to fund the Metrolinx transit plan for the region.


Recently, Ontario Premier Kathleen Wynne established the Transit Investment Strategy Panel where Anne Golden of Ryerson University sits as the chairman. The Transit Investment Strategy Panel is examining the Metrolinx recommendations as well as other options to fund public transit in the Greater Toronto and Hamilton Region.


“This is a fundamental issue for us,” said OTA president David Bradley. “Unlike motorists, truckers do not have the choice to take transit. Why should they be expected to pay for infrastructure they do not use and for which any benefit in terms of reduced roadway and highway congestion is at best speculative.”


Before the end of this year, the Transit Investment Strategy panel advisory is scheduled to submit and report their findings to the government. Inclusive in the so-called “revenue tools” recommended by Metrolinx is a regional tack-on of 5 cents per liter to the provincial diesel fuel tax.


“As the largest consumer of diesel fuel, the introduction of a regional diesel fuel tax would likely impose a higher burden on the trucking industry than any other business sector,” said Bradley. “It must be understood that trucking is a hyper-competitive industry where companies compete on pennies per mile. A regional diesel fuel tax would put trucking companies based in the GTHA at a competitive disadvantage with carriers from outside the region.”


“Obviously, we are keenly interested in measures to improve the efficient movement of people and goods into, out of and within the Province of Ontario and traffic congestion in the GTHA is a significant problem that is exacting an enormous toll, both economically and socially,” said Bradley. “But the Metrolinx plan is exclusively focused on regional transit and in our view it is essential that a network/province wide perspective be considered.”


It is through this lens that OTA views the discussion around taxes, fees and other charges that people and businesses both within and outside of the GTHA may be asked to pay. Perhaps the most significant challenge government’s face is the lack of trust taxpayers has that their tax dollars will actually go to their intended purpose and be spent wisely. “Too often tax and fee increases have been justified on various grounds, including transportation infrastructure improvements, only to have the money go into the black hole of the general revenue fund where it can be spent on virtually anything,” Bradley said. “Taxpayers want government to be transparent. They want to see a return on their investment. They want value for money. They want governments to come up with reasonable plans and to see them through. Why should they believe things will be different this time?”


Bradley cites the recent political machinations over subways versus LRTs as doing little to build confidence in the credibility of the plan, or that the various governments work together to optimize the value for money equation. “Before going to the public for more money, meaningful measures are needed to win back some level of public trust,” said Bradley. “Since assuming the office, the Premier has made encouraging statements regarding the need for taxpayers to believe they will see a return on their investment and she has alluded to the use of dedicated funds, the need for a provincial perspective, a balance between infrastructure investment in roads and transit. What is needed are meaningful measures consistent with these statements.”


OTA is now considering the proposed GST hike as the most efficient way, since it would ensure a broad spectrum of beneficiaries to contribute, despite the other revenue tools suggested by Metrolinx. The problem is however the question of whether the federal government would allow such a measure to proceed.


Bradley adds, “there needs to be a meaningful discussion about what transit users themselves should pay,” since a property tax increase should also not be ruled out. The user pay mantra cannot be applied just to road users. “It would be unrealistic to expect there should be no transit subsidies, or to put it another way, that transit users should be required to pay the full and true cost of the system; but what is their fair share?” said Bradley.


Furthermore, according to Bradley, the OTA has always maintained the position that the trucking industry should pay its fair share of the costs of maintaining and upgrading the infrastructure it uses. OTA estimates the industry currently contributes about $1.12 billion in combined provincial diesel fuel taxes and driver/vehicle registration fees to the provincial government’s coffers, which is slightly more than half of all anticipated infrastructure expenditures on highways in the government’s current fiscal year.


Bradley stated the starting point for any discussion on additional revenue streams must include a commitment that: (1) The funds collected from the trucking industry will be dedicated to roads and highways; (2) The accounting of revenue and expenditures will be transparent; and (3) The industry has some say in the establishment of priority projects.


Moreover, all heavy-duty road users must be required to pay their fair share, Bradley said. “The commercial vehicle registration fees applied to most heavy trucks are being raised by 70%, but there are a significant number of heavy trucks supposedly in the road maintenance business that, for no good reason, continues to enjoy an exemption from having to pay any registration fees or fuel taxes.”


OTA estimates this leakage to be in the order of $50 million per year. “This issue must be addressed before government can credibly ask the trucking industry to consider paying more,” said Bradley.




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