Industry needs help to adjust to federal carbon tax
The MHCA has sent a letter to regional federal minister Jim Carr, voicing concern about the lack of recognition of the impact of the carbon tax on the heavy construction industry. The association has also asked that the Canadian Construction Association organize a planning session with the leadership of heavy construction associations across Canada, to develop a response to Ottawa’s climate change and carbon tax plan.
Because Manitoba is not imposing its own carbon tax, Ottawa will implement a tax at distribution of various fuels and oils, including diesel, in this province and three others that have refused to adopt a carbon tax. In April, the carbon tax on diesel fuel in Manitoba will add 6.3 cents per litre. The price of gasoline will rise by 4.4 cents/L.
Ottawa, however, plans to use the revenues raised by the carbon tax for rebates to individuals; those rebates will be greater than actual costs of the tax to individuals. The remaining revenue (about $190 million over the next 5 years) will be distributed to public institutions, Indigenous communities and small to medium-sized businesses.
“Our industry will pay that additional fuel cost at various points in their operations, but most obviously on every litre of diesel and gasoline used in core infrastructure construction – roads, bridges, highways, sewer & water and water-control structures,” MHCA President Chris Lorenc said. “Our industry – public infrastructure works – is fuel intensive, with no substitute, and that means heavy cost.”
Fuel accounts for as much as 30% of the heavy construction industry’s costs of operations. In an informal survey some member companies have estimated the starting impact of carbon tax to reach $1 million annually. The MHCA sent Carr a letter this week, asking for his support on the association’s suggestions for ways to help industry adjust to the costs of the tax and adopt newer technology that is still needing to be adapted so it works reliably in our heavy construction engines and machines.
Among the MHCA’s suggestions are:
- ensure carbon tax is not subject to federal excise and provincial fuel levies at the pump
- ensure the carbon tax is not applied to the biodiesel component of fuel
- accelerate rate of depreciation for Tier 4 Final, via capital cost allowance
- remove PST from purchase of anti-idling technology
- establish an expert panel to review the applicability of available or emerging technologies and practices to reduce GHG emissions
“If we want to preserve the value of provincial and municipal public-works budgets – to ensure the volume of work that gets done is not significantly reduced – then industry needs help to offset the higher fuel costs,” Lorenc explained.
MHCA will update members on Carr’s response once the minister has replied.
Meanwhile, a CCA-organized conference call among provincial construction associations can help share ideas among the four provinces to be affected by a federal carbon tax, and to learn from the experience in provinces where a carbon tax was applied prior to the federal plan.