Posted by: energyblogwalter | September 9, 2008

Re: Harper promises to cut tax on diesel :: Toronto Star :: Sept 9th 2008

It’s the election, so I better put a comment down while it’s on my mind…

Harper promised today a 2-4 cent tax cut on diesel fuel over four years, touting it as some kind of miricle tax cut to save truckers and industry.

Where to start… okay first off diesel fuel has increassed by more than 2-4 cents in the last year, let alone four years. In a short period of time we’d be back where we started and no closer to a solution of rising costs. I guess by then they hope to be reelected? Quite an empty promise.

Also it’s a $600 million dollar tax cut, money that would go to repairs and resurfacing asphalt. Wouldn’t this burden provinces with repairs? Provinces are battling major road repairs right now as it is, having less help isn’t useful. This cut would cost the federal/provincial relationship dollar for dollar and does not represent any savings, but instead a loss.

Asphalt is is currently at $676 per tonne, according to the May 20th issue here: . When that goes up even a dollar, it also kills any benefit to this tax cut. Yes it will go up as demand for oil continues. Again long term this doesn’t answer the question: How do you afford increasing required repairs?

Plan would increase traffic unless there is some kind of industry ban on traffic increases, which is unlikely. Increased traffic will create more potholes. Since the MTO is reducing repairs, the potholes will get bigger, requiring more expensive repairs whenever they are repaired. It’s not looking good at all.

Also this does not reduce reliance on imported diesel fuels but rather just delays real decisions.

Railways I feel are a solution. Yes they use diesel to run, but are far more efficient. Can also be electrified as diesel diminishes in supply or as costs rise. Railways get rid of the road repair problem, and are far cheaper than compared to road maintenence requirements. Eliminates the increases in trucking traffic on our roads, thus reducing billions in federal and provincial repairs. We already have many derelict railways ready for reinvestment. Railways are not sexy and require people to maintain them and use them. Would brush up against a trucking lobby.

Since there would be fewer trucks the truckers would be invited to join the ranks of the new railway lines. Having a railway investment policy would only then make a 2-4 cent tax reduction possible. I wouldn’t cut it, there needs to be an incentive to switch. Price increases are incentives in the market, I would try to understand that, not ignore the market.

This tax cut proposal is a road to nowhere and also creates even more severe problems. The more it’s pondered the worst it gets.

Grade: F



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