Ontario Trucking Association Chief Address Queen’s Park Media Event on Benefits of HST

(Toronto, ON) – David Bradley, president of the Ontario Trucking Association (OTA) was one of the speakers today at a Queen’s Park press conference by the Smart Tax Alliance, a coalition of business groups including the Ontario and Canadian Chambers of Commerce, the Canadian Council of Chief Executives, the Canadian Manufacturers and Exporters of Ontario and others. The harmonization of the provincial sales tax and the federal goods and services tax is set to come into being on July 1st. OTA has been an advocate of sales tax reform for more than a decade, which was reflected in Bradley’s remarks today:

“The Ontario Trucking Association, which represents over a thousand Ontario-based trucking entities, welcomes the harmonization of provincial sales taxes on business inputs in our industry with the federal GST. It’s good for the trucking industry; it’s good for the competitiveness of Ontario goods that move by truck – and that’s most of what is produced in the province – and its good tax policy. Outdated and non-uniformly applied taxes on business inputs distort marketplaces and investment decisions by the people and companies who create jobs.

Ontario is one of the largest and most attractive freight markets in North America. In a deregulated, free market freight that moves into, out of and within Ontario doesn’t have to be transported by trucking companies from Ontario. Truckers from anywhere on the continent can do the job. All Ontario trucking companies want is a level playing. For too long Ontario trucking companies have had to compete with carriers from jurisdictions that either already have harmonized sales taxes – such as Quebec and the Maritime provinces – or those that exempt trucking equipment from sales tax, such as Michigan, or Alberta which has no sales tax at all.

This made it difficult for Ontario trucking companies to compete on a pure cost basis. A study we had conducted for us a few years back by the Rotman School of Business estimated that in terms of the marginal effective tax rate on capital, Ontario-based trucking firms were at a staggering 31 per cent tax disadvantage compared to trucking fleets based in Michigan, Ohio and New York. A significant contributor to that was the PST system.

The current system has also has been a drag on investment in new, more productive, safer and more environmentally-benign equipment and technology. Few Ontario economy industries have borne such a burden in terms of the taxation of business inputs as trucking has. Even our maintenance and repair labour costs were subject to the PST.

Moreover, Ontario trucking companies have been in the unenviable situation of being the only industry in the province to have to administer three input tax systems: the PST, the GST and something called the multi-jurisdictional vehicle tax (or MJVT) which morphed out of the PST back in the 1990’s. Not only was this an enormous administrative burden for trucking companies but it was no doubt extremely difficult for the Ministry of Revenue to administer and audit.

The HST is not a hand-out to business. As I said earlier it is sound tax policy. It is the modernization of the sales tax system for business based on progressive, international tax norms. In trucking we still pay our fair share of taxes even on business inputs. There are still excise taxes on diesel fuel, various payroll taxes, and fees for licences and permits.

There will be some initial adjustment for everyone. I believe the government has taken the appropriate steps to minimize those affects on the public, through the income tax system and various exemptions. Business too will have to change its systems and some tax previously paid – for such as vehicle permit renewals – will not be refunded. But, we need to keep our eye on the ball. What Ontario needs today are competitive businesses that will create and retain jobs at home. The HST is a key initiative in that regard.”