TAXATION OF RAILWAY RIGHTS-OF-WAY (2006)
Railway Rights-Of-Way (ROW) are treated as utilities for purposes of property taxation. Unlike utilities, railways are not monopolies but, instead do business within a highly competitive environment where market pressures keep rates low.
Canadian shippers benefit from this competitive environment with some of the lowest freight rates in the world. Railways own, construct, maintain, police and operate their own ROW. The capital investment in the railway industry is one of the highest of any sector in Canada.
From a general infrastructure perspective, rail lines compete for over-land traffic and contracts, with other surface modes of transportation such as highways. However, unlike rail corridors highways are not taxed. The Chamber believes this provides for an uneven playing field between modes and as such believes that railways should be excluded from the payment of property taxes on ROW that are in use for rail traffic. Provincial tax policies should be reviewed and amended to allow British Columbia and Canadian rail to compete fairly with other modes of transport, and with U.S. railroads.
Private railway firms built early Canadian railways, often with government assistance, as it was the only inter provincial and continental mode of transportation for freight and passenger service across Canada. Throughout time, rail’s importance in the Canadian economy has been on the decline, and has lost its market share to trucks for freight transportation and cars for passenger transportation. The history of Canadian rail has been an evolution in regulation. Early regulations focused on rail rates and rate setting, while today railways no longer have to keep unprofitable lines operating in the public interest.
Railways own, construct, maintain, police and operate their own ROW. In 2004 the rail companies in BC paid the third highest amount of property taxes in Canada behind Ontario and Quebec. In 2004 there were 6,920 kilometres of track in operation in BC and 7,284 kilometres of track in Alberta. The rail companies in BC paid over three times the amount for roughly the same amount of rail.
Provincial rail fuel taxes vary widely between jurisdictions, in BC 3¢ per litre was paid in 2004, while in Alberta only 1.5¢ per litre was paid. Fuel taxes are put into highway infrastructure improvements and expansions, but none of the fuel tax is put back into the railways, these taxes could be utilized to offset the ROW property taxes.
As discussed, for the purposes of property taxation, rail ROW are treated as utilities. Unlike utilities, railways are no longer natural monopolies but actually operate within a highly competitive environment where market pressures keep rates low. As governments own the ROW on the highways, commercial road users do not have to pay any property taxes for using the highways; this gives the commercial users of publicly-funding roads an unfair advantage over rail. The taxation of rail ROW is a significant impediment to rail’s competitiveness in the transportation of goods.
THE CHAMBER RECOMMENDS
That the Provincial Government review and amend tax policies that do not constitute a level playing field for all commercial modes of transportation.
Railway Rights-Of-Way (ROW) are treated as utilities for purposes of property taxation. Unlike utilities, railways are not monopolies but, instead do business within a highly competitive environment where market pressures keep rates low.
Canadian shippers benefit from this competitive environment with some of the lowest freight rates in the world. Railways own, construct, maintain, police and operate their own ROW. The capital investment in the railway industry is one of the highest of any sector in Canada.
From a general infrastructure perspective, rail lines compete for over-land traffic and contracts, with other surface modes of transportation such as highways. However, unlike rail corridors highways are not taxed. The Chamber believes this provides for an uneven playing field between modes and as such believes that railways should be excluded from the payment of property taxes on ROW that are in use for rail traffic. Provincial tax policies should be reviewed and amended to allow British Columbia and Canadian rail to compete fairly with other modes of transport, and with U.S. railroads.
Private railway firms built early Canadian railways, often with government assistance, as it was the only inter provincial and continental mode of transportation for freight and passenger service across Canada. Throughout time, rail’s importance in the Canadian economy has been on the decline, and has lost its market share to trucks for freight transportation and cars for passenger transportation. The history of Canadian rail has been an evolution in regulation. Early regulations focused on rail rates and rate setting, while today railways no longer have to keep unprofitable lines operating in the public interest.
Railways own, construct, maintain, police and operate their own ROW. In 2004 the rail companies in BC paid the third highest amount of property taxes in Canada behind Ontario and Quebec. In 2004 there were 6,920 kilometres of track in operation in BC and 7,284 kilometres of track in Alberta. The rail companies in BC paid over three times the amount for roughly the same amount of rail.
Provincial rail fuel taxes vary widely between jurisdictions, in BC 3¢ per litre was paid in 2004, while in Alberta only 1.5¢ per litre was paid. Fuel taxes are put into highway infrastructure improvements and expansions, but none of the fuel tax is put back into the railways, these taxes could be utilized to offset the ROW property taxes.
As discussed, for the purposes of property taxation, rail ROW are treated as utilities. Unlike utilities, railways are no longer natural monopolies but actually operate within a highly competitive environment where market pressures keep rates low. As governments own the ROW on the highways, commercial road users do not have to pay any property taxes for using the highways; this gives the commercial users of publicly-funding roads an unfair advantage over rail. The taxation of rail ROW is a significant impediment to rail’s competitiveness in the transportation of goods.
THE CHAMBER RECOMMENDS
That the Provincial Government review and amend tax policies that do not constitute a level playing field for all commercial modes of transportation.
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