“How much do you estimate the increase in rail traffic in Canada and the United States over the next ten years? Do railroad companies pay the same petroleum fuel taxes as other consumers? – Jean Perreault
Sources vary when it comes to measuring anticipated industry growth. There is no equivalent in the railway sector to the International Air Transport Association, which represents the airline industry. Opinions therefore vary from one firm to another.
Despite volumes that may contract from time to time in the current economic context, the railways should remain on an upward trajectory in the longer term. According to the American firm Grand View Research, annual growth should be around 4.4% by the end of the decade.
In a report released at the end of March, the New York firm Technavio anticipated, for its part, an annual increase of around 7.5% in the North American rail industry.
“It [growth] is also going to be stimulated by the fact that we all understand that in order to achieve a certain carbon neutrality and reduce greenhouse gases […], what we recommend is to use more rail transport than trucks,” says Jacques Roy, professor of operations and logistics management at HEC Montréal.
As for the fuel component, the answer is clearer: yes, rail carriers have to pay taxes. They are subject to the federal excise tax on diesel fuel – 4 cents per liter – and other tax measures in force in every province and state south of the border. In Quebec, the tax on “fuel oil for locomotives” is 3 cents per litre, according to Revenue Quebec data.
The most recent annual report from the Canadian National Railway Company (CN) confirms this trend. Last year, the country’s largest rail carrier saw its fuel bill reach $2.5 billion. This sum takes into account “provincial, federal and state taxes on fuel”, specifies the company based in Montreal. However, it does not specify how many liters of fuel oil were consumed by its locomotives. It is therefore difficult to have an idea of the amount paid to governments in taxes and other duties.
In addition to taxes, greenhouse gas emissions have an impact for CN. In a 2022 investor report on “climate change,” the company points out that things like capping Quebec’s GHG emissions had “impacted [its] business.”
“We had to pay carbon taxes in British Columbia and Alberta and suffered the effects of the federal fuel charge, which came into effect in 2019,” adds CN.
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