September 12, 2008

Politics

Diesel tax cut welcomed by construction industry but details required

VINCE VERSACE

staff writer

Prime Minister Stephen Harper’s proposed diesel tax cut if re-elected has caught the attention of construction stakeholders but more details are needed says one.

“Any break on diesel will be a benefit of course,” says John Hull, president of the Ready Mixed Concrete Association of Ontario.

“A break on taxes will help producers but we need to know more. Will it require 10 cents worth of paperwork to get it?”

Prime Minister Harper announced at a recent rally that if his Conservative party is re-elected it would cut the federal excise tax on diesel fuel in half, from four cents per litre to two cents. The tax cut is designed to reduce transportation and consumer goods costs.

“At a time when Canadians are concerned about affordability, and energy prices are rising, we should be doing what we can to lower prices,” Harper said. “This tax reduction will benefit consumers who buy virtually anything that moves by truck, train, ship or plane.”

The diesel tax currently generates over $1 billion a year in revenue for the federal government. If the reduction were to occur, it would represent a $600 million tax cut.

Considering the wide use of diesel by road builders across Canada, let alone Ontario, the Ontario Road Builders’ Association (ORBA) says the cut sounds promising.

“We use a lot of diesel in road building and overall in construction, a tax cut there would help us,” says Rob Bradford, executive director of ORBA.

Provincial governments also levy fuel excise taxes and their tax rates on diesel range from around 7 cents per litre in the Yukon to 20 cents per litre in Prince Edward Island, averaging roughly 14 cents per litre across Canada.

In addition to excise taxes, Quebec charges a 9 cent per litre carbon tax on diesel fuel, and British Columbia charges a 2.76 cent per litre carbon tax on diesel, which will rise to 8.27 cents per litre over five years.

Municipal taxes on diesel are also imposed by the cities of Vancouver and Victoria.

Under the Liberals Green Shift plan, diesel fuel is exempt from new taxes in the first year of the plan, but taxes on diesel would rise to seven cents a litre by the fourth year of the plan.

The plan also calls for $1 billion to be set aside over four years as a contingency fund to offset the impact of the plan’s carbon tax.

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