BLOG: Harper's Proposed Diesel Tax Reduction

by Melanie — September 17, 2008

The contents of these blogs are not authored by Apathy Is Boring. Apathy Is Boring is a non-partisan organization and statements made reflect only the views of their authors.

Last Tuesday Stephen Harper announced that, if elected, he would reduce the tax on diesel by 50% from 4 to 2 cents per litre. According to Harper, this measure would "benefit consumers who buy virtually anything that moves by truck, train, ship or plane". The measure is also aimed at relieving the industries that have been hardest hit by the rising cost of energy.

The proposed measure has found support among industries in the transportation sector. Both the Railway Association of Canada and the Air Transportation Association of Canada have expressed their satisfaction, stating that the proposed reduction in the diesel tax would lead to significant annual savings. The Canadian Federation of Independent Business is confident that these savings will ultimately be felt by consumers.

Quebec’s Union des consommateurs disagrees. Spokesperson Charles Tanguay states that the measure will cost the federal government too much in annual revenue loss (estimated at $600 million per year), while the impact on consumers will be minimal. The Canadian Federation of Municipalities would have preferred this money be spent on public transit, thereby reducing Canada’s dependence on the automobile and its vulnerability to fluctuating fuel costs. CAA Québec stated that the money would have been best spent on road infrastructure.

The proposed tax reduction has been deplored by environmentalists who believe it will lead to an increase in greenhouse gas emissions. “Anyone who says they are concerned about climate change cannot propose such a measure in good conscience”, says Steven Guilbault, spokesperson for environmental group Equiterre.

A reduction in the cost of fuel will do nothing to encourage industries to improve their efficiency, but rather will sustain the status quo. According to the Pembina Institute, a research and advocacy organization that seeks sustainable energy solutions, the trucking industry, which represents 13% of Canada’s greenhouse gas emissions, has increased its emissions by 92% between 1990 and 2005. The tax reduction proposed by Harper is “clearly a step backwards”, says the Pembina Institute’s Matthew Bramley.

The Pembina Institute raises an interesting point. A diesel tax reduction would do nothing to encourage greater efficiency in the industries that rely heavily on fossil fuels, nor would it do anything to address this dependence. The proposed diesel tax cut is a shortsighted and contradictory measure. Any measure aimed at encouraging industries and consumers to sustain or even increase their consumption of an increasingly inaccessible resource is purely illogical.

What we need to be doing is helping Canadian industries and consumers transition away from their reliance on fossil fuels, towards renewable and readily accessible resources. We need to optimize these resources by developing efficient technologies and new business models.

Various political parties are proposing interesting measures that would be a step in this direction. If you want to find out what they’re proposing, consult the following websites:

Green Party of Canada
Liberal Party of Canada
New Democratic Party

Sources:
CBC
The Pembina Institute