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Fuel TaxesEffective March 1, 2003, the Provincial Government increased fuel taxes by 3.5 cents in a bid to raise an additional $150 - $175 million per year. This is a good time to review the law respecting this type of tax. For those of you residing in the interior of the Province, each litre of clear gasoline includes the following taxes:
The total, then, is approximately 29.5 cents per litre. For clear diesel, the rate is half a cent higher. The 3.5 cents per litre tax increase is for the BC Transport Financing Authority, and we are told by the Provincial Government that all of this additional tax money will be dedicated to financing transportation infastructure. Consumers in the Greater Vancouver or Victoria regions pay more taxes than interior consumers (6 cents more in Vancouver, 2.5 cents more in Victoria) in order to fund public transit. My comments above relate to clear gasoline and clear diesel or, in other words, the usual fuel that we purchase at a service station. Under the Motor Fuel Tax Act, the Government is entitled to colour fuel. This fuel, commonly called "marked fuel", may be used in off-highway situations for such things as tractors, industrial machines, stationary or portable engines, or certain types of motor vehicles in the logging, mining, road building, or petroleum and natural gas industries. The idea behind marked fuel is, of course, that the people who do not use the highways should not have to pay taxes for their construction and maintenance. The recent increase in fuel taxes does not extend to marked fuel. In fact, the entire Provincial Tax rate for marked fuel is 3.0 cents per litre. The Federal Government does not give any tax breaks on marked fuel. The types of logging vehicles that can use marked fuel in an off-highway situation include log hauling trucks, lumber hauling trucks, crew crummies or buses used exclusively for the transportation of company employees, fire trucks, and ambulances. It is not unusual for log haulers to spend part of each trip off-highway and part on-highway. Those trucks should be using clear diesel, and the ability exists to apply to the Consumer Taxation Branch for a partial refund of tax, in relation to the off-highway work. The Refund Application Form and Off Highway Worksheet may be taken from the Internet, and one would have to provide some fairly detailed calculations to justify a refund. Usually that means that a logbook should be maintained showing, for each trip, the off-highway and on-highway miles. As well, one should submit supporting documentation showing fuel purchases and load slips or pay statements. These applications can be made annually or, in fact, once every six years. Many people find, though, that the administrative hassle associated with maintaining the required records and submitting the required forms outweighs the value of the refund, and so many opportunities to apply for these refunds are missed. Long distance haulers who travel outside of BC are entitled to participate under the International Fuel Tax Agreement. This agreement establishes a single uniform system for administering and collecting fuel consumption taxes from inter-jurisdictional motor carriers. Such carriers must either obtain an annual IFTA Carrier License, or may obtain a temporary Motor Fuel User Permit from I.C.B.C. The details of this program are beyond the scope of this article. The point, though, is that road taxes should be apportioned amongst the various jurisdictions that a carrier operates in. Government decisions about imposing taxes, and deciding where to spend that money, are entirely political. This might be a good time to remind the Federal Government that it collects almost $800 million in gas taxes from BC residents each year and usually gives about 5% of that back to the Province to spend on highway construction. The rest goes into general revenue. With the planned improvement of the Trans Canada Highway from Revelstoke to the Alberta border, let's hope that the Federal Government contributes its fair share. John Drayton is a Kamloops lawyer practicing in the areas of Forestry and Motor Transport Law. Back to Articles Index
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