Canadian National president and chief executive officer Paul M. Tellier is urging Canadian governments to adopt a tax credit regime that he says would lower shipper rates, increase rail freight volumes and cut government road repair and construction costs.
Tellier says CN’s proposed Road Relief and Shipper Tax Credit “has the potential to bring enormous benefits across the economy.” He claims the tax credit scheme could lower freight rates for shippers by hundreds of millions of dollars; divert about 100 million tonnes of freight from highway to rail every year, save about $500 million annually in highway maintenance and construction costs borne by governments, and reduce greenhouse gas emissions by some nine megatonnes annually.
Tellier says the revenue-neutral tax credit, utilizing $160 million in annual fuel taxes already levied on railroads in Canada, would go to shippers – not railroads. Shippers would receive tax government diversion credits as incentives to move freight by rail rather than road. By re-engineering their transportation processes to use rail instead of truck, , shippers would also enjoy an immediate 10 to 15 per cent reduction in freight rates.
“The tax credit wouldn’t cost governments anything, because they would save even more on infrastructure costs related to increasing road traffic volumes,” he says.
Tellier, in addressing the Canada Transportation Act (CTA) review process, says it’s vital that policymakers resist intense pressures to use the process to fix Canada’s farm income crisis – a crisis prompted by a grain subsidy war between the United States and European Union. Tellier says that, while farm input costs have risen substantially in recent years, CN’s rail rates for grain transportation have declined by almost 50 per cent since rail deregulation commenced in 1987.
“The farm income crisis is not an issue for the CTA review. It’s a policy problem the Government of Canada has to address within the context of World Trade Organization and North American Free Trade Agreement rules,” he says.
The CTA review process, says Tellier, should not be used to reward “poachers” seeking forced access to CN’s and Canadian Pacific Railway’s main lines.
“Forced access would “damage Canada’s rail infrastructure in the long run. It would put the network at the disposal of those who did not build it, do not maintain it and who are not responsible for the service it provides. It’s been tried elsewhere, and it doesn’t work,” he says.
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