Ontario Trucking Association: Diesel Fuel Taxes Should Go to Roads, Not Transit

TORONTO, ONTARIO--(Marketwired - June 11, 2013) - The Ontario Trucking Association (OTA) is objecting to the proposal from Metrolinx for a special 5-cent a litre tax on diesel fuel to help pay for the regional transportation agency's $20 billion transit plan for the Greater Toronto and Hamilton Area.

"The trucking industry believes in paying its fair share for the infrastructure it uses. However, Metrolinx is a transit plan; it does not address the equally compelling need to maintain and upgrade the region's or the province's network of roads, highways and bridges," says OTA's president and CEO, David Bradley.

Instead, OTA's position is that tax revenues generated from commercial diesel fuel taxes and heavy truck registration fees should be allocated to a dedicated provincial trust fund specifically for roads, highways and bridges.

"That's where the trucking industry's fuel tax dollars should be going," Bradley says. "Truckers should not be expected to pay for transit. Unlike motorists who have a choice in terms of whether to drive or take transit, truckers have no such choice."

In addition, truckers are already smarting from a 70-per cent increase in commercial plate fees announced by the McGuinty government last year. "No other sector has been subjected to such an increase in user fees," Bradley claims.

Moreover, there are a huge number of heavy utility trucks (such as mobile cranes, vacuum trucks, concrete pumping trucks, water trucks, etc.) which are exempt from the normal registration and licensing requirements and therefore are exempt from paying any vehicle registration fees, use tax-exempt diesel fuel, and are not subject to most other vehicle or safety compliance standards.

OTA estimates the revenue leakage to the province from this omission to be around $50 million per year.

The exemption appears to go back to an old law exempting road-building machines from provincial registration. "These vehicles are not asphalt spreaders, bulldozers and the like, which are clearly road-building machines that operate exclusively in construction zones," Bradley says. "These are trucks; they serve many commercial purposes and customers, they operate on provincial highways and they impose wear and tear on the public infrastructure like any other motor vehicle.

"The only difference is they don't pay anything," he argues."$50 million would buy a lot of infrastructure; we have a hard time accepting that some trucks should pay more while others pay nothing. From a tax point of view these non-contributing trucks enjoy the same tax status as bicycles."

OTA says a regional diesel fuel tax is potentially very problematic. The association believes it would impact the competitiveness of GTHA trucking companies and could cause some to re-locate outside the boundaries of the region. It exempts carriers from contributing towards the infrastructure costs who are based outside of the region (and from outside of the province) but who operate into, out of and through the region every day.

It will create an increased administrative burden for government and for the commercial taxpayer. The current fuel tax systems are well-established; the mechanisms for collecting, remitting and auditing are well-entrenched in both industry and government. They are also governed by a well-functioning North American administrative agreement (IFTA).

"We want to play a constructive role in the conversation about how to pay for transportation infrastructure," says Bradley. "The premier is commended for making gridlock a priority of her government, but we need to use this opportunity to take a system-wide view, to build trust and to do it right."