CTA pleased with tax cuts, border investments in Tories’ first budget

OTTAWA – Canada’s first Conservative budget in nearly 15 years is good news for small and medium businesses — trucking carriers included.

Prime Minister Stephen Harper made good on his core election promises yesterday, cutting corporate and personal taxes, shaving a point off the GST, and boosting spending on infrastructure and the military.

Among the highlights for businesses:

A GST cut by one percentage point to six percent; the corporate income-tax rate drops to 20.5 percent from 21 percent on Jan. 1, 2008 and to 19 percent by 2010; corporate surtax and capital tax to be eliminated ahead of schedule; and 12 percent small-business tax rate drops to 11 percent by 2009.

… but not as much as before, says the Conservative government.

Beyond financial relief, trucking companies also hope to see improved highway systems and better border flow as a result of a new, four-year $5.5 billion highways and border infrastructure fund. Another $303 million goes toward a “border strategy to promote the movement of low-risk trade and traffic within North America while protecting Canadians from security threats.” Presumably, that funding will help boost participation for current commercial border clearance programs like FAST as well as start up Canada’s own cargo security protocols like Advance Commercial Information (ACI).

The government will also kick-in an additional $1.4 billion this year for public safety, which includes more cash for border security — including arming border agents at land ports — Finance Minister Jim Flaherty said in his first budget.

Furthermore, the Tories will maintain the former Liberal regime’s previously announced $591 million Pacific Gateway project, which addresses increasing trade demand with Asia by improving border and port facilitation, skills and human resource availability, and intermodal systems.

Canada’s agriculture sector will also receive and additional $500 million in aid, plus a $1-billion transition fund for farmers.

There is an additional $3.5 billion in new funding to provinces and some of that money could also benefit the transportation sector as it’s funneled to relevant departments in some jurisdictions.

“The budget is broad-based, energetic and on balance very positive,” said the CEO of the Canadian Trucking Alliance, David Bradley, in a press release after the budget’s unveiling on Parliament Hill. “There is some much-needed corporate tax relief for our customers and for carriers; there is recognition that business inputs should not be taxed at all; and, there is a new highway and borders infrastructure fund. The government has definitely tried to cover all the base paths with regard to their priority areas.”

If there was one sore spot, says Bradley, it’s that the government chose not to eliminate the federal excise tax on diesel fuel at a time when truckers are experiencing unprecedented costs at the pumps. “Excise taxation on diesel fuel is an outdated, regressive form of taxation that is especially harmful in low margin businesses like trucking,” says Bradley.

The excise tax isn’t being stripped off diesel purchases, but
more of that cash will find its way onto highways like the Trans-Canada

Historically, only a miniscule percentage of the total tax collected from road users ends up being spent back on the pavement, but Bradley can find consolation that at least some of the taxes on diesel will go to pay for the new highways and border infrastructure fund.

The budget plan specifically acknowledges that 63 percent of Canada’s trade with the U.S. moves by truck. On that note, Flaherty called the border and infrastructure fund (not a trust fund, Bradley points out) “a long-term commitment of unprecedented new investment designed to help provinces and territories meet system needs.” A key objective, said the minister, “will be to cost share with provinces and territories improvements to the core national system, including the Trans-Canada Highway.

While CTA applauds the initiative, Bradley says he hopes that it will be enough to leverage provincial investment and cooperation.

Several other measures were introduced to encourage skilled trades, including a new Apprenticeship Job Creation Tax Credit of up to $2,000 per apprentice, for each of the first two years of their contract. In addition, a new Apprenticeship Incentive Grant of $1,000 per year for the first two years of Red Seal and other apprenticeship programs. And, a new $500 deduction for the cost of tools for apprentices is being introduced.

The pulp and paper sector specifically received accelerated CCA rates for investments in energy generation equipment that uses renewable energy like forest biomass, or uses fossil fuels more efficiently.

That’s a step in the right direction that could eventually reward trucking for its own environmental achievements, notes Bradley.

“In future budgets we hope to see the same sort of thinking applied to investment in the new, smog-free truck engines, and auxiliary equipment that will reduce greenhouse gas emissions and air pollutants,” he says.