Fuel Tax on Municipal Equipment

Res #: 15-04A
Number: 15
Year: 2004
Midterm: No
Expired: Yes
Responses Received: No
Departments: Saskatchewan Finance

Resolution No. 15-04A

WHEREAS, rural municipalities presently must use unmarked diesel in their unlicensed equipment for maintenance of roads; and

WHEREAS, marked diesel is diesel fuel which has been marked or coloured in accordance with Section 20 of The Fuel Tax Act, 2000, and which may not be used for non-farm businesses; and

WHEREAS, rural municipalities are non-farm businesses, but they obtain their revenue from taxation of farmers who are authorized to use marked diesel in their unlicensed farm machinery for farming activities; and

WHEREAS, the unlicensed machinery used by a rural municipality is used for the purpose of building and maintaining roads so that the farmer can carry out his farming activities; and

WHEREAS, it is unfair to the taxpayers of the rural municipality to use tax revenue to pay for unmarked diesel to maintain roads used by the farmers;

THEREFORE BE IT RESOLVED, that rural municipalities be allowed to use marked diesel in their unlicensed equipment.

Response from Honourable Harry Van Mulligen, Minister of Finance:

I appreciate the reasons for the request to use tax-free marked diesel fuel in road building and maintenance equipment. Rural municipalities play an important role in ensuring we have a safe and reliable transportation system. The recent economic slowdown combined with other factors, such as problems faced by the agricultural sector, has created fiscal pressures for the Province.

Allowing rural municipalities to use tax-free marked diesel fuel in their equipment would not one reduce the Province's revenue, but it could also set a precedent for similar requests from other sectors. As a result, less money would be available to fund health care, education and other essential programs and services. Although I understand your concerns, we are not able to remove the tax on fuel used for building and maintaining roads at this time.