Non-Canadian carriers operating in Saskatchewan, Manitoba, Ontario and New Brunswick are required to register with the Canadian Revenue Agency (CRA), the federal tax authority, and submit quarterly reports.
“The Greenhouse Gas Pollution Pricing Act also applies to foreign road carriers with operations in Canada just the same as it does for Canadian carriers,” wrote CRA spokesperson Etienne Biram.
The carbon tax went into effect in the four provinces on April 1. While the surcharge is primarily being implemented through fuel prices, the registration system serves as a backstop for fuel that is purchased elsewhere.
The surcharge is roughly C$0.20 cents per gallon (The Canadian dollar equals US$0.75.) Failure to register may result in a fine of up to C$2,000, with potential interest and penalties added to any unreported charges.
The registration system also provides for refunds for instances when fuel is purchased with the surcharge and then burned outside of four provinces. However, trucks coming from the U.S. are unlikely to be fueling in Canada given that most major cities are relatively close to the border.
“The problem, as I see it, would be a situation where a U.S.-based carrier enters Canada with a full tank of (untaxed) fuel, does its business in Canada (burning fuel and creating greenhouse gases in the process), and then returns to the U.S. without refueling in Canada. This would evade the intention of the law,” said John Peterson, a New York-based trade lawyer with Neville Peterson.
The Canadian Trucking Alliance (CTA), which has been highly critical of the carbon tax, has expressed reservations about the registration system and its implementation with non-Canadian carriers.
“CTA cannot support the implementation of a road transport registration system administered by CRA until the government can show it is ready to administer it effectively, provide industry the proper guidance for compliance, and ensure a level playing field with foreign-based competitors,” the CTA wrote in correspondence to the CRA.
CRA spokesperson Biram said the agency’s efforts include “a robust compliance program and enforcement measures consistent with other programs administered by the CRA.” However, he did not immediately provide details about how exactly the enforcement measures would work.
Regardless of what kind of enforcement takes shape, Peterson said U.S. carriers shouldn’t take their chances.
“If a U.S.-based trucking company is making regular runs into Canada, I’d probably recommend that they register,” he said. “The problems will probably be with smaller carriers who make occasional runs into Canada, and may not even know about the registration requirement.”