At a time when Canadians continue to watch their grocery bills soar, the Saskatchewan Trucking Association (STA) is asking the provincial government to remove a tax that it believes is driving up food prices.
The STA is calling for the removal of a road tax that is charged on diesel fuel used to power refrigeration units hauled by truck trailers. These units are used to transport food and critical medications across the province, and a road tax adds on an additional 12 cents per litre to the fuel costs.
“Any tax, obviously, added onto the shipping costs of moving groceries is going to be applied to the consumers in the store,” said George Henderson, STA director of operations.
“If this road tax wasn’t on there, it would give opportunity for grocery and shipping companies to turn around and reduce that cost.”
Each refrigeration unit on a trailer costs around $24,000 in fuel each year, according to the STA. That does not include the cost to fuel the truck that hauls it.
Under the province’s Marked Diesel Fuel Program, certain industries, including agriculture and commercial loggers, are eligible to use tax-reduced diesel on equipment that does not touch the highway. The trucking industry is ineligible, but wants refrigeration units to be added to the program.
“It doesn’t seem like a lot, 12 cents a litre. But the consumption of diesel fuel for industry is quite large,” Henderson said. “These carriers aren’t going to put it (the savings) in their pockets. They’re going to give their employees wage increases and they’re going to be able to buy more equipment.”
Henderson says the money saved would help Saskatchewan’s economy.
In a statement to CTV News, the Saskatchewan Government said the trucking industry would save an estimated $1 million annually if refrigeration units were added to the Marked Diesel Fuel Program.
“Spread over the entire industry, this would have a minimal effect on food inflation,” the government said.
Sylvain Charlebois, the senior director of the Agri-Food Analytics Lab at Dalhousie University, said it’s hard to predict what impact a possible tax removal could have on prices.
“You do increase the chances of seeing prices drop, but there is no certainty,” he said. “Whether or not it will impact or influence retail prices really depends on a variety of different factors.”
Trade policies and disputes, sourcing of food and the weather can all play a role in food prices.
The latest data from Loblaw Companies Ltd. shows overall food costs were up 2.8 per cent in June, compared to the previous year.
Rising meat prices were the biggest contributing factor, according to Charlebois.
“Vegetables are really the big surprise. They’re actually cheaper right now than last year, on average,” he said.
Shoppers who spoke to CTV News say every little bit helps, and they’d like to see some relief at the store.
“You can see the overall bills just growing and growing,” Siri Hawes said. “It’s a little stressful for sure.”
Nancy Kucey filled only a handful of shopping bags on her latest trip to the grocery store. She dropped more than $200 for her items, the most she says she’s ever paid.
“I don’t splurge,” she said while packing her groceries into the trunk of her car. “I bought meat and I guess that’s probably the highest, and some fresh vegetables.”
Prices on meat, dairy and produce aren’t likely to rise substantially in the coming months, according to Charlebois, but trade uncertainty is expected to increase the cost of dry goods, frozen foods and bakery items.
