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Rail News: Rail Industry Trends

Canadian railway association: No appreciation for federal depreciation policy

The Canadian federal government recently released a new budget, which maintains railroads' capital cost allowances, according to the Railway Association of Canada (RAC). Depreciation rates for transportation equipment remain 40 percent for trucks, 33 percent for ships, 30 percent for trailers, 25 percent for aircraft and 15 percent for trains.

"Rail is the most energy efficient way of moving people and goods," said Christopher Jones, RAC director of federal/provincial government liaison, in a prepared statement. "One of the best ways to achieve these benefits is through capital cost allowance reductions for rail."

The difference in Canadian and U.S. policies enables American railroads to depreciate their locomotives and rail cars, and modernize their fleets more than twice as fast as Canadian railroads, Jones believes.

"Canada's policy ignores the rapid pace of technological and market change, and skews shippers' choice toward putting more freight on congested roads," he said.

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More News from 3/3/2005