CPR’s CEO Says Canadians Losing Out On Economic Growth Because Government Policy Discriminates Against Rail

VANCOUVER, British Columbia – Canadians are losing out on economic growth, cleaner air and safer, less congested roads because government taxation and investment policies routinely and consistently discriminate against the country’s railways, Robert Ritchie, President and Chief Executive Officer of Canadian Pacific Railway, said here today.

Speaking to the Western Transportation Advisory Council (Westac), Ritchie called it absurd that property taxes on CPR’s right-of-way range from $913 per mile of track in one province to $8,802 per mile of track in another province. Similar striking variations exist in provincial fuel tax, with CPR paying from 1.5 cents per liter to as high as 15 cents per liter on locomotive fuel, a ten-fold difference.

He said the discrimination exists because those who ship by truck do not have to pay through their truck rates a single cent of property taxes for using the highways, and the fuel tax truckers pay helps to improve and expand the highways they use. None of the fuel tax paid by railways is put back into the rail network, and some of it actually is poured back into the highways, which are used by the railways’ competitors.

Ritchie said this situation creates an uneven playing field in the transportation industry, skewing shipper choice away from rail and toward trucks.

Addressing provincial ministers of Transportation, he asked: “Do you see yourselves as ministers of Transportation or as ministers of Highways? As matters stand today, it is my distinct impression that public roads and highways are your primary focus.” He added that fuel tax and property taxes on rights-of-way appear to be “pure revenue grabs” because none of the money is being put back into rail infrastructure.

“I say, eliminate those rail taxes and let the rail industry put that money back into its infrastructure. The return to governments in the form of economic growth would far exceed the foregone tax revenue.”

He called for the Canadian rail system to be viewed as a strategic national asset and be freed from the provincial tax and regulatory impediments that are holding the nation as a whole back from reaching its full potential.

In the absence of fundamental taxation and regulatory reform, Ritchie said he has been advocating public-private partnerships – or P3 – as another way to create a more level playing field. P3 calls for the public sector and the railways to invest jointly in projects to provide services with public benefits.

“Through such partnerships, we would be able to do more to expand and improve urban and inter-city passenger rail. We would be able to decongest the major arteries of truck traffic and at the same time make trucking more efficient by transporting trailers between terminals in major hubs. We would be able to help governments reach their greenhouse gas emission targets. We would be able to reduce congestion at border crossings and increase the speed of trade flows,” Ritchie said.

One P3 example is the $600-million Detroit River Tunnel Project proposed by CPR and its partner, Borealis Transportation Infrastructure Trust. The partnership would punch a new rail tunnel under the Detroit River and convert CPR’s existing rail tunnel into a two-way roadway for international truck traffic. The partners are seeking $150 million of funding from a $300-million border infrastructure upgrade fund created by the federal and Ontario governments.

Ritchie said the project will directly benefit the Canadian economy by relieving border congestion and improving trade flow. Every day, 10,000 trucks converge on Windsor to cross what ranks as the busiest border crossing in the world, handling 10 per cent of Canada’s GDP. “Amazingly, 10 per cent of Canada’s GDP moves down a municipal street in Windsor with 16 traffic lights,” Ritchie said.

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