Speed Limiter Debate gains Momentum

Several years ago I worked with a lease/owner operator who got into an accident. He damaged a trailer. The damages totaled $2664.00 (so he was told, he never received an invoice). His deductible, clearly labeled on his signed contract, was $2500 yet the company removed the entire amount from his statement. He asked the controller why he charged the extra $164. The reply was “…we didn’t put it through insurance…”. The operator calmly and rationally tried to reason with the controller to get back his $164. It was no use! The company stood by their flawed logic and ignored their written contract. They had his money and nothing short of a law suite would change it. I had another operator who experienced the exact same situation and flawed logic but that time the damage was $5700 ($3200 above deductible).
Flawed logic is a form of deception, an action designed to distract someone from the glaring facts. This intellectual “slight of hand” is similar to strategic misdirection or “spin”. Call me old fashioned but to me a spin doctor is just a fancy word for professional liar. Imagine an occupation that pays people to lie and on a sliding scale, the better the liar the higher the pay.
There are many professions and industries that require “spin”. The most infamous work(ed) in the tobacco industry. They funded millions of dollars of “research” to “prove” that tobacco didn’t cause cancer. However, when the truth finally came out in court the industry coughed up BILLIONS.
The speed limiter debate is not without its own spin doctors. Let’s first look at the facts on how the law is administered. Let’s see where the liability or punishment is placed and what affect it has on the industry. On July 3rd I talked with a company driver who got a fine of $390.00 for driving a truck that is “non-compliant”. He asked his boss many times when he was going to “emasculate” it. The procrastinating employer kept saying “don’t worry” blah, blah, blah… He’ll pay the fine if there is one. Needless to say the driver had to keep working (wife-three kids-mortgage). Then he got checked. When he delivered the ticket, his boss still agreed to pay it (luckily) but he found out two things along the way: first the ticket goes on his personal abstract (apparently no demerits), second there was NO fine for the owner, it doesn’t even go on his CVOR scoring (MAYBE in the future but not now). It therefore appears the application of speed limiters is a simple punishment and tax on helpless drivers, not on non-compliant companies. The driver I mentioned had absolutely no physical or legal opportunity to comply. His only option was to refuse to work and therefore refuse to pay his mortgage and feed his wife and kids. In effect, this legislation places the ENFORCENENT of a law firstly on the pocketbook of the DRIVER yet ignoring the ones with authority.
Secondly let’s consider the evidence trail of how the speed limiter legislation was lobbied (spun). It was promoted as reducing both accidents and the industries carbon footprint (GHG). The argument originated from the OTA spin doctors who were successful in rejecting or ignoring all other evidence: University of Manitoba’s Barry E. Prentice’s excellent article June 2008, Transport Canada Studies released July 4th (not even three weeks after the vote), the notorious “public meeting” shame, and many others. The OTA’s spin is complete with its truth’s, half truths or maybe even full out lies. We shouldn’t be shocked at this. “Spinning” may well be a large part of David Bradley’s job description.
There are some truth’s mildly associated with the spin. The 400 series highways may well carry the majority of freight travel in Ontario. The 401 highway alone accommodates over 400,000 vehicles per day and is one of the busiest highways in the WORLD! One contributing factor of the volume is the speed the vehicles are allowed to travel. If the OPP actually enforced the speed limit the volume would decrease as congestion increased. Slowing down trucks and implying it doesn’t affect congestion should insult intelligent people. It is mathematically impossible!

The half truth about accidents is that speed kills. Of course speed kills, especially when its 80,000 lbs, but speed alone doesn’t kill, especially with heavy trucks. It’s the passing that creates the danger. Therefore, logically, the speed limiters actually INCREASE danger rather than decrease it (this logic was brought out by Mr. Prentice’s article but flat out ignored by the MTO). It was bad enough changing lanes going the same speed as the four wheelers, now try changing lanes going 15kmh slower than the 399,999 Mario Andretti’s. There is a direct correlation between the time of day traveling and the volume of urban fingers you get. But, if you are collecting fingers, there is more to consider than just time of day. The flat as a pancake 400 series thoroughfare does not represent the entire contour of Ontario. It has lower grades than Uncle Buck.
Traveling Hwy 17 has become a real crap shoot. Consider the hill near Roseport, which used to be climbed without gearing down (all-be-it approaching over speed limit). It must now be ascended in the basement (results slightly vary depending on gear configuration of course). A fully loaded tri-axle hitting the base of the hill at 112 KMH can stay in top gear right to the peak. However, just 7 KMH slower (combined with a delayed electronic kick in) has the driver pumping down gears till he’s crawling up at about 35 KMH (a perfect opportunity for collecting rural fingers). Since most drivers are paid by the mile the speed limiter reduces wages to about $8.64 per hour on Roseport hill (I’m afraid I don’t know the exact name). Isn’t that below minimum wage?
But alas, this is only late summer! What happens in our frigid ice and snow? Since drivers can’t chain up in Ontario how much do they get per hour when the inevitable spinout occurs? Can a driver start collecting EI immediately upon spinning or do they have to wait until the tow truck comes?
Assuming the MTO's primary concern is public safety is ignoring their track record, for example the awarding of LCV permits (Long Combination Vehicles). If safety was MTO’s primary concern, only trucking companies with excellent safety records would be awarded. But MTO awarded exclusive permits to companies who rated “satisfactory-unaudited” while hundreds of companies who rated “excellent” were flat out ignored. Logical people understand that MTO is all about political favoritism not safety. It’s the provincial Liberal version of the sponsorship scandal.
Safety was only one spin the MTO and OTA used to ram through bill 41. The other spin was the reduction of green house gases. If the OPP would enforce the speed limit the way all other provinces and states do, GHG savings would be generated from both trucks and four wheelers without any tradeoff with safety due to an increase in passing. Therefore any GHG savings from electronically limited trucks on the 400 series is a mute to duplicitous argument.
The real question is: what affect dose electronic limiters have on non 401 Series roads? Does GHG increase, decrease or stay the same?
Let’s look again at Hwy 17. According to my documented sources (all else being equal) it now takes about 45 liters MORE to travel from Thunder Bay to Ottawa than it did June 30 2009 and takes 15-25 minutes longer (in the summer). Trucks can no longer use momentum to carry them to the top of hills. Add to this cost: 4 wheelers trying to pass 35 MPH trucks in two way traffic, winter spinouts, or twisted drive shafts. All these situations costing MORE! It uses MORE fuel, emits MORE GHG and increases our dependence on fossil fuel. Sounds like a government solution to me! Anyone care for a cigarette?
Why would the MTO be interested in passing a law that has little to do with safety or GHG? The answer is simple, it’s because the OTA is interested! The speed limiters were birthed and written by the Ontario Trucking Association lobby group.

“…as for the amendments, we have none, and in fact I would go further and say that we would be very strongly opposed to any amendment. This is our bill. Every period, every comma, every semicolon was put there by us, and we would be very, very unhappy were it to be amended in any way…”

Lobby groups (same as unions) serve their members first. It’s not right or wrong it’s just how it’s done.
So why is the Ontario Trucking Association interested in increasing GHG, costs, risks and accidents? It surly isn’t to mandate their competition better fuel savings. I originally thought it was “…to legislate competition OUT of Ontario markets…”. Though this may have been on the minds of some OTA members I now believe the lion share of the reason is YOU! That’s right the Truck Driver!
Given the chance to drive 105KMH for 40 CPM verses 115KMH+ for 40 CPM, too many drivers were still choosing the 115KMH+. The OTA members, instead of possibly raising their pay rates, chose to restrict their competitions ability to attract YOU! That now means your speed and paycheck are limited (specifically in jurisdictions that have posted speed limits over 105 KMH). While other provinces and states are increasing speed limits Ontario mandates inter-jurisdictional limits. Just who do they think they are?
Let’s remember, individual OTA members hide behind the association, manipulating the industry human resource pools through legislation all the while “spinning” Bill 41 as a great environmental and safety initiative.
At the time of passing the MTO knew of the “spin” the OTA was making (otherwise they would have waited for Transport Canada’s studies and given a true forum to debate the issue). The reason they didn’t is because the Ontario Trucking Association politically owns Jim Bradley! Even though the liberal party was elected to represent the public, that assumption appears to be just another spin. As we can see, once elected, the office goes to the highest bidder. Vote out the liberals if you like, but that still doesn’t expose the bank rollers. The true puppeteers of this spin are the OTA members
It was the individual members of the OTA that voted to spin and misrepresent Bill 41 to the public. They hid behind an association but they are all equally complicit. Let’s remember, if they agree to spin in one area of business, to achieve their bottom line objectives, how safe do you feel working for them?
At the beginning of this article I wrote about a trucking company who “spun” $164 from an operators pay. Would you leave a company if they spun 164 of your dollars? Some would some wouldn’t. Would you leave a company if they spun 3200 of your dollars? Most would. The employer-employee relationship is based on trust. If they practice the art of “spinning” for $164 you can be assured they will enforce it for $3200. A smart driver will leave (or at least start looking) the minute they see the spin regardless of the amount or its impact on them personally.

From Subsistence Allowance to Speed Limiters

I'm switching gears somewhat as the implementation of Per-deum/subsistance allowance becomes more accepted (at least somewhat). As the first step of introduction to my second book, I'm entering another topic, "trucking companies". Specifically, I'll be drawing the line on the speed limiter debate. It is a very hot and passionate controversy. By no means is it over just because it was rammed through a vote.

Bill-41 is an example of how our democracy works. It was the brainchild of the Ontario Trucking Association. People elected to an office generally don't know much about an industry. Lobby groups present their case and (if it appears politicaly expedient to do so) bills are passed. Therefore the real power in Canada (at least at this time in our history) is lobby groups such as the OTA (made up of trucking companies).

Let's think logically about speed limiters for a moment. On the surface it appears a "no-brainer" enforce speed limits electronically rather than through the OPP. Anyone who opposes it appears to be a red-neck speeder bound to break all laws (a very unpopular poition). I don't think that position will be able to be reversed publicaly without sound leadership accompanied by clear arguments about the negative aspects of ESL's.

The negatives (just to name a few):
1. Limiting Inter-provincial trucks means OTA/MTO is governing other jurisdictions which have different speed limits.
2. This jurisdictional conflict may jeopardize NAFTA
3. May make roadways LESS safe (due to increased passing)
4. May actually increase fuel consumption since momentum for fuel management is significantly reduced.

If Canadian truckers don't band together against jurisdictional conflicts (such as these) they will continue to be needlessly regulated. I think it's about time that the trucker fights back.

Action Packed Future

For those who have never read the information on this sight before its best to view it from the beginning of November forward, it may save you thousands of dollars in taxes.

We will be rearranging this blog sight to accommodate another topic. Its an introduction to my second book. Until then any questions regarding Subsistence Allowance and its application can be read at this sight or you can contact me directly at Robert @thrconsulting.ca.

Stay tuned for additional action packed controvertial trucking industry research and analysis.

Another Canadian Tax Scandal

June 2009 will probably prove to be a major juncture in my battle with meal allowance, per-deum, subsistence allowance. Nothing what I’ve said in the past will change but I think a slight change in focus may be needed. In the last three years I have NEVER battled CRA regarding the application of meal allowance. However, I HAVE battled accountants and lease/owner operators.

The battle is never direct. Those who contact me directly have been very gracious and professional. However, there are too many accountants just not applying the rules correctly… or not even at ALL!. It’s disgraceful, and can only lead to disaster and confusion. It is in June 2009 I must make a choice for the betterment of the entire industry. Where do I concentrate my efforts? Immediately, right now, I’m concerned about the thousands of operators who are financially liable and don’t know it or refuse to believe it. It’s a tax scandal waiting to be exposed, but this time CRA is not the problem.

Success is not always what it seems

Subsistence allowance/Per-deum continues to be a controversial topic among accountants, not CRA agents but accountants. They seem to continuously mumble about its application and their firms liability. Operators get half truths one month and reversals the next. If accountants don’t “get with it” operators bumping down the road will loose their faith in either the system, their current accountant or both.

When I first started publishing articles (after my book) I thought the lion share of education would be directed at the operators not the accountants. Oh well, it seems I’ll be tapping away at two industries simultaneously.

Last week we had another client go through an audit. It’s a standard thing for clients to be audited. The interesting thing about this one was that contrary to our communication to our client harsh and strong words were directed at the auditor. Apparently our clients thought it “prudent” to give the auditor a piece of their mind before the audit even began. This is not advisable under any situation since auditors have a great deal of autonomy and can make things much more difficult than they normally are. Though some accountants would like to mussel clients we have not gone that far… yet (just kidding).

The audit actually went exceptionally well even though the “foundation” started shaky. If fact our entire system got anther round of compliments, the employer-employee agreement all the way down to the personal vehicle log. It helped that the client was A rated and balanced down to zero regularly (monthly). All our other audits occurred with C or D rated.

Even so, I am still convinced that the application of subsistence nationally is dependant on a universal application of standards among accountants and operators. Two or three years from now, if Ottawa politics changes every subsistence allowance user may find themselves in the crosshairs if not universally applied.

I’m focused on making the system secure… which is sometimes a challenge when dealing with CRA.

That's my story.... one more time!

Two more court cases came into the media recently, both had to do with personal vehicle, log books, and company vehicles (in this example leases). I have been rather blunt regarding business use of personal vehicle or company vehicle used for personal use, even accused of being more rigorous than the average bean counter. These two situations may bring some clarity as to both my position and my “standards”.

The first was Jorgensen v. Canada, 2009 T.C.J. No. 20, T.C.C., Sheridan J., Jan 19/09. Digest No. 2846-025 (Approx. 7 pp.). A farmer had an extended cab diesel truck with no log books supplied. Other not so critical information was that the taxpayer traded in the lease as soon as the warranty expired or was about to expire. Additionally the “extended cab” was modified or converted to a “non-passenger”.

The judge (considering all the evidence) assessed that the truck was used all or substantially all for business purposes. Even though the taxpayers did not maintain a daily record of the trucks use, they maintained sufficient source records of their business activities to allow them to reconstruct a reasonable diary of the business use of the truck.

This, at face value, seems to contradict much of what I have been stating. However, let’s look at the second case.

The second is Martin v. Canada 2009 T.C.J. No. 2, T.C.C., Margeson J., Jan 05/09. Digest No. 2846-023 (Approx. 13 pp.). A corporation leased vehicle was provided to the wives of two shareholders. CRA assessed taxable benefits and standby charges for each participant. There were no log books supplied and the vehicles were licensed as personal use. The judge agreed with CRA in this case.

In my personal estimation 70%+ of personal vehicles that are used for business purposes (and are used as deductions) do not have log books. Too many accountants revert to the first case assuming they can “reconstruct” a defense after that fact. Many auditors don’t push the issue. The industry assumption becomes “no log book is defendable”. I still strongly disagree, especially in the trucking industry. The Jorgensen’s were farmers, which is a completely different industry than trucking. Driving to and from fields moving equipment and supplies is vastly different than using a “second vehicle” to transfer paperwork and supplies. Reconstructing a reasonable diary for a trucker (without a log) will be vastly different. It will be similar to the Martin case where vehicles are licensed as personal rather than farm use.

My position stands! No log book (for truckers using personal vehicle) no deduction. That’s my story and I’m sticking to it.

Subsistence Allowance, a look to the future

OK! Long time no update. Congratulations to all those who won a copy of my book on CD. April was a very busy month for me. We have received a great deal of communication about subsistence allowance coast to coast. It seems many accountants are realizing the national implications.

This is what I predict will happen over the next several years (assuming no political changes in Ottawa). Independent accountants will apply subsistence allowance (per-deum) to clients (usually with a signed liability waver). Therefore operators will be left “vulnerable” to regional auditor interpretations.

Until CRA comes out with specific bulletins on the trucking industry applications the entire system will not be “confirmed” in the minds of many designated accountants. Since currently no firm is publicly willing to ensure the application (providing protection as we do) the entire industry is left without assurance (something CRA has on their side). One of the several reasons I believe they will NOT comment publicly for several years (if at all).

It’s a little like what happened when Don Wilkenson won that court case in August 2000. Within a couple months accountants all across Canada knew that the TL2 was not restricted to CRA guidelines, however, they were not informed of what number they CAN use… therefore to ensure returns accountants continued to restrict THEMSELVES to the guidelines. Uncertainty fosters conservative standards… or… if in doubt leave it out!

For those who want to know what needs to be done read my prior posts. It makes more sense when you start reading from November 1st 2008