July 14, 2008

Trucking industry hit hard by British Columbia’s new carbon tax

Richard Gilbert

staff writer

British Columbia’s new carbon tax is far from revenue neutral for the province’s trucking industry some say, because it imposes a tax burden that transfers wealth to other taxpayers.

The 2008 budget was lauded by the B.C. government and environmental groups for introducing a carbon tax, which came into effect on July 1.

The tax will generate an estimated $1.85 billion over three years and is considered to be revenue neutral, because all the taxes collected by the government will be returned to businesses and individuals.

However, the trucking industry is concerned about the impacts of this new measure.

“For the trucking guys we represent it’s an issue,” said Philip Hochstein, president of the Independent Contractors and Businesses Association (ICBA).

“Revenue neutral doesn’t mean that there will be no losers. My truckers will be losers because they will pay more tax than they get back.”

Another representative of the trucking industry agreed with the analysis of the impact of the new tax.

“It (the carbon tax) has quite an impact on our industry,” said Paul Landry, president and CEO of the BC Trucking Association (BCTA).

“We will pay about 10 per cent of the carbon tax that is collected in B.C., which amounts to about $500 million in the next five years and about $190 million over the next three years. This will result in a transfer of wealth from the trucking industry to other British Columbians.”

According to Landry, the owner of a tractor trailer, a typical truck will consume 60,000 to 70,000 litres of fuel a year.

Therefore, the carbon tax will cost the trucking industry about $1,000 per long haul truck this year, $3,000 in 2009 and $6,000 in 2012. A carbon tax on diesel fuel starting at 2.8 cents this year and rising to 8.2 cents by 2012 will collect more than $270 million annually by 2012.

The structure of the industry means truckers will be hit hard by these cost increases.

Landry said 50 per cent of the trucking industry is made up of small firms with a fleet of one truck, while 90 per cent have a fleet of five trucks or less. So, most of the carbon tax money will come from small carriers and owner operators.

The BCTA knows the trucking industry needs to become more fuel efficient. For this reason, they want financial support and more of the carbon tax money returned to the industry for things like low resistance tires, anti-idling systems and more aerodynamic trucks.

The BCTA is also seeking government assistance to provide credible and reliable information on proven technologies and strategies for achieving this objective.

At the national level, the Canadian Trucking Alliance has also voiced concerns about plans by federal opposition leader Stephane Dion to introduce a country-wide carbon tax.

“The last thing the trucking industry needs is more tax on diesel fuel,” said David Bradley, CEO of the CTA.

“With diesel fuel prices at record highs and fuel overtaking labour as the number one component of operating cost, the trucking industry does not need further price signals from government to know that improving fuel efficiency and thereby reducing green house gas emissions is a good thing.”

Bradley agreed with the representatives of the B.C. trucking industry that the carbon tax imposes an unfair tax burden.

“There is no tax neutrality for truckers in this plan,” he said. The plan itself estimates that by the end of the fourth year the average freight trucker’s total annual operating expenses will be increased by about $1,700 per year.

The CTA also recommends that the carbon tax revenues should have a policy purpose, which targets the trucking industry.

“They could, for example, make that tax a carbon tax, and earmark the revenues generated by it to assisting the industry in its efforts to accelerate the penetration of the new generation of smog-free trucks and fuel efficiency technologies into the marketplace,” he said.

Bradley argued that a tax on Canadian truckers combined with the high dollar will reduce their competitive position, because U.S. truckers will likely be exempt from the tax.

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