Federal government waives import taxes on new ships

Canada’s Department of Finance has announced it will waive a 25 percent tariff on imports of all general cargo vessels and tankers, as well as ferries longer than 129 metres.

Eliminating the 25-percent tariff will save shipowners $25 million per year over the next decade.

The Canadian Press reports that the aim is to help the Canadian shipping industry modernize its fleet.

CITA reaction

The Canadian Industrial Transportation Association (CITA) applauded the decision, saying the 25 percent duty has been a barrier to renewing the Great Lakes and coastal fleets.

CITA adds that for the Great Lakes shipping industry and other industries that depend on safe, energy efficient ships that meet the latest environmental standards, the announcement is good news.

Duty costs were being passed on

Under the Customs Tariff, imported ships are subject to a tariff rate of 25 percent, the highest rate of duty for industrial goods.

The federal government says that numerous stakeholders have emphasized that duty costs on these imported vessels are passed on to Canadian producers and users through increased shipping rates.

In public consultations late last year, proposed duty relief received support from provincial governments, marine industry associations, vessel operators, port authorities and representatives of the energy, agriculture and steel industries, among others.

To complement the new duty remission framework, which will be retroactive to January 1, 2010, the federal government also made decisions on outstanding company-specific duty relief requests made by BC Ferries and Algoma Central Corporation before January 1, 2010.

The duties remitted in these requests amount to $119.4 million and $15 million, respectively. The vessels covered by these remission orders would now qualify for duty relief under the tariff framework announced today.