Railway Association of Canada calls for transportation, warehousing tax reform

The Railway Association of Canada (RAC) is calling on the Canadian government to introduce a new targeted tax policy and extend 100% immediate depreciation to Canada’s transportation and warehousing sector.

The call is based on an independent economic analysis, prepared by Giroux Strategies and commissioned by the RAC, that found the move could generate nearly C$900 million in GDP while attracting nearly C$600 million in additional private-sector investment each year.

Transportation and warehousing is the only major Canadian sector with a higher marginal effective tax rate than its U.S. counterpart, putting it at a competitive disadvantage, RAC officials said in a press release.

According to the report, extending the depreciation would generate C$1.79 in private-sector investment and C$2.70 in annual GDP growth for every C$1 of net federal fiscal cost. The total federal fiscal cost would be less than 0.1% of federal tax revenues, RAC officials said.

“One of the report’s most important findings is that this policy delivers strong economic returns at a relatively modest fiscal cost,” said Jonathan Thibault, director, economics, data and research at RAC. “Extending immediate depreciation would be a targeted and fiscally responsible way to translate the government’s productivity, investment and trade objectives into measurable economic benefits.”

The full report is available on the RAC’s website.