Ontario Trucking Association

Ontario Trucking Association

March 26, 2009 17:28 ET

Ontario Budget 2009: Trucking Association Applauds Move to Harmonize Sales Tax

TORONTO, ONTARIO--(Marketwire - March 26, 2009) - The Ontario Trucking Association is applauding today's budget announcement by provincial finance minister, Dwight Duncan, that Ontario intends to move forward with a plan to harmonize the provincial sales tax (PST) with the federal goods and services tax (GST) starting July 1st, 2010. "We have been seeking this announcement for the past few years," says OTA President David Bradley. "And we commend the Premier and the minister for taking this bold but necessary step. This is sound tax policy for the 21st century."

A key recommendation of virtually every OTA pre-budget submission this decade has been to encourage Ontario to harmonize its sales tax regime with the GST, or at the very least to introduce a value-added form of taxation for business inputs in industries like trucking. According to Bradley, the trucking industry has been living with, "A business input tax system that is outdated, archaic, uncompetitive, administratively burdensome and discriminatory for far too long." Bradley says that, "In a low margin industry like trucking, taxes on business inputs, which a company must pay whether it is generating a profit or not, are regressive."

"Truckers, more than many other industries in Ontario, and certainly more than our competition from other parts of Canada and from the United States, where key business inputs such as tractors, trailers, parts, etc., are either eligible for GST-type credits or are exempt from sales tax, have had to endure a situation where the more the more they invest in equipment that is more efficient, more productive, safer and more environmentally-friendly, the more tax they have had to pay."

In addition, Bradley says the trucking industry must administer at least three different sales tax regimes - the provincial sales tax (PST) on equipment used solely in Ontario, the Multi-Jurisdictional Tax (MJVT) on equipment that is used domestically and also in other provinces and states, and the federal GST. "The current treatment of business inputs for tax purposes in Ontario is in dire need of reform if we want our truckers to be competitive and if we want them to be able to invest in the latest, the safest and the new generation of GHG-reducing equipment." Bradley says OTA, "Will be pressing the government for a commitment that provincial sales tax harmonization will include the MJVT, which is a special form of sales tax specifically levied on extra-provincial trucking operations, as well as the PST." (Indications from finance officials during the budget lock-up were that it was their expectation that the MJVT will be included in the harmonization).

Harmonization would also address another longstanding complaint of OTA - that being that while the current PST is supposedly only applied to goods and not to services, for some reason maintenance and repair labour has also been subject to provincial sales tax. Under a harmonized system, truckers would receive input tax credits for this service. "We look forward to participating in the consultative process to come; there is an awful lot of work to do."

Bradley also welcomed the news that the Province will be investing $1.7 billion in highways in fiscal year 2009-10 followed by an additional $2 billion in 2010-11. $247 million has been allocated to the Windsor Gateway in 2009-10 plus $715 in 2010-11. $648 million is being allocated to twinning sections of Highways 69, 11 and 17. "By investing in our transportation system and the highway network in particular, the Ontario Government is helping ensure the continued efficient movement of goods that manufacturers, shippers and exporters rely upon. We're very pleased that transportation infrastructure is being given a high priority in this year's budget."

In addition other business taxes will be cut by $4.5 billion over three years. Starting July 1, 2010, the government will:

- Cut the general Corporate Income Tax (CIT) rate from 14% to 12% and reduce the rate to 10% by 2013

- Cut the CIT rate for small businesses from 5.5% to 4.5%

- Eliminate the CIT small business deduction surtax, making Ontario the only Canadian jurisdiction that would eliminate this barrier to growing small businesses

- Exempt more small and medium-sized businesses from the Corporate Minimum Tax and cut the CMT rate from 4% to 2.7%

Ontario Trucking Association (www.ontruck.org) - is a business association representing motor carriers operating into, out of and within Ontario. The trucking industry is one of Ontario's largest employers. Trucks haul 90% of all consumer products and foodstuffs produced and consumed in the province and 80% of Ontario's trade with the United States. Founded in 1926, the association's membership comprises trucking companies of all sizes, shipping all types of commodities, from all regions of North America. OTA is a member of the Canadian Trucking Alliance www.cantruck.ca.

Contact Information

  • Ontario Trucking Association
    Doug Switzer
    Vice President Public Affairs
    (416) 249-7401 x 238