Grain farmers in the three prairie provinces are paying a provincial carbon tax to the British Columbia government.
The tax took effect July 1 at a rate of 2.4 cents per litre on all fossil fuels consumed within the province.
That includes diesel fuel burned by the railways as they haul prairie grain through B.C to export terminals at Vancouver and Prince Rupert.
The railways will pay the tax but, as with all grain handling and transportation fees, it will come out of farmers’ pockets.
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“Farmers are going to pay for it, no question,” said Garth Gish of Prairie West Terminal of Plenty, Sask., which ships grain cars to the west coast ports. “Any increase in costs in the system always comes back to them.”
He said he thinks the railways are taking the attitude that they’ll pass the tax along to shippers and farmers.
Both national railways will levy a surcharge on every loaded rail car that moves in the province. Both note that the surcharge was included in the 2008-09 rail revenue cap.
Canadian National Railway has set its surcharge at $7.80 per rail car and $3.90 per container.
Information on the Canadian Pacific Railway’s website indicates its surcharge will be $11.25 per car for long-haul traffic and $3 per 20-foot container.
Empty cars returning to the Prairies will not have to pay a second surcharge.
The total surcharge to be paid, based on 360,000 rail cars and an average surcharge between the two railways of $10 a car, could be around $3.6 million.
The B.C. government plans to triple the tax by 2012 and both railways say their surcharges will increase at the same rate.
That would put CN’s 2012 levy at roughly $25 and CPR’s at more than $33.
Both railways say whatever they collect will be paid directly to the government, producing no additional revenue for the rail company.
The provincial tax was anticipated when the Canadian Transportation Agency set the rail revenue cap this spring, so the 2008-09 cap reflects the presence of the surcharge.
However, there are a number of unanswered questions.
One is how the surcharge collected since July 1 will be accounted for when the agency calculates 2007-08 rail revenue this fall.
Another is whether the railways will include the surcharge when they submit their 2008-09 revenue figures to the agency next year.
For example, if a railway receives $3,000 in revenue for a car of grain and adds on a $10 surcharge, when it comes time to submit revenue numbers to the agency for revenue cap purposes, will it submit $3,000 or $3,010?
A CPR spokesperson said that since the surcharge is included in the 2008-09 revenue cap, “we are not adding a surcharge to grain movements.”
A transportation official who asked not to be named said, “there may be an issue here.”
Gish expressed frustration at the apparent lack of attention being paid to the tax by the grain industry.
“Nobody in government or farm circles has said a darn word about it,” he said.
“And anytime a tax is imposed and nobody complains about it, it will likely stay around and go up.”
