Dyed diesel has now been cleared for general use in the U.S. as gas prices soar, but Canadians could still face fines if caught using it on roads and highways.
Red-dyed diesel is essentially the same as regular diesel fuel, but is coloured a reddish brown in order to identify it for use off-road, like with farming, construction vehicles and other off-road uses.
U.S. President Donald Trump, on Monday, signed an executive order directing secretaries of the U.S. Treasury as well as the departments of transportation and agriculture to waive the off-road requirement for this tax-free diesel.
The move followed similar changes at the state level, including in Texas, as Americans struggle to pay for diesel and other fuels as a result of soaring prices from the U.S. war on Iran.
The changes mean if someone like a U.S. farmer has red-dyed diesel in bulk, which would have been exclusively used for their farming and other equipment, they can now use the same fuel in their trucks to drive on the roads without facing any penalties or taxes.
Canada’s agriculture industry is heavily reliant on diesel to power its equipment and trucks, and at a time when diesel prices have been soaring, industry leaders say similar changes would be welcomed here.
“Canadian farmers have always had access to dyed diesel on-farm for the equipment that runs on diesel engines, combines, tractors, self-propelled vehicles in general that are used on the farm,” says Keith Currie, president of the Canadian Federation of Agriculture.
“There’s constantly additional surcharge put on because of increased diesel prices, and so if they had an opportunity to run dyed diesel and not have the road tax, that would certainly stabilize some of the pricing of diesel fuel, which has gotten extremely expensive now.“
Is the federal government considering changes?
As it stands, using red-dyed diesel to fuel road and highway vehicles is illegal in Canada, and is enforced mostly at the provincial and territorial level through specific fuel tax legislation.
Although the federal government has waived the excise fuel tax on regular and diesel fuel in Canada, certain road taxes are still applied to diesel cleared for use on roads and highways in some provinces and territories.
Get breaking National news
“Federal fuel excise tax rules do not include special treatment associated with coloured or dyed diesel fuel,” said the Department of Finance in a statement.
“Provinces and territories may have their own tax rules, restrictions and enforcement requirements governing coloured fuel, including its use in on-road vehicles.”
Global News has sent requests to all provincial and territorial finance ministries to ask if any changes to red-dyed diesel laws are being considered, but none confirmed any changes to the laws were being considered.
Saskatchewan said doing so would mean a significant loss in revenue needed to maintain infrastructure.
“100 per cent of Saskatchewan’s fuel tax revenue is legislated to be used to maintain and improve Saskatchewan’s highways and transportation infrastructure,” said a spokesperson for the Saskatchewan Ministry of Finance in a statement.
“Expanding the Farm Fuel Program to allow all on-road uses of diesel fuel would amount to cutting the highways budget. This would impact the safety of motorists as well as the transportation of the exports that our economy relies on.”
Can you cross the border with red-dyed diesel?
The short answer is yes, but there are important distinctions and requirements that must be followed in order to avoid fines.
Rob Kreklewetz is a lawyer and managing director at Millar Kreklewetz LLP, which specializes in tax customs and trade law.
“The dye is what identifies whether it’s tax paid or tax unpaid. So if it’s red dye, no taxes have been paid on that fuel, and the local ministry of finance officials are going to be hunting for that if used on highway,” says Kreklewetz.
“I’m free to go to the U.S., and load that fuel onto my diesel pickup if I want, and Trump is allowing people in the U.S. to do that. The question is, how do I bring it across the border?”
He explains that it is technically legal to bring most types of fuel from the U.S. into Canada, including red-dyed diesel, but it comes down to declaring it if it is in a container, and if it is being used to fuel a road vehicle.
“You’re bringing in a jerry can of red diesel, it’s just like bringing in the Louis Vuitton purse. Do you want to take the chance of not declaring that Louis Vuitton purse? Well, it could be subject to seizure and then a whole bunch of really bad consequences at the border,” says Kreklewetz.
Once the red-dyed fuel is placed in the fuel tank of a road vehicle, that’s where things change.
“I am potentially susceptible there to a bit of a problem. Somebody pulls me over, I go through an administrative finance checkpoint, they put a little dipstick into my fuel tank, it comes out red,” says Kreklewetz.
“Technically, they would say, I have contravened the Fuel Tax Act.”
Kreklewetz says it is not necessarily a criminal offence at this point, but if caught, road users could be subject to fines, which differ depending on the jurisdiction.
In Ontario, motorists can be fined between $200-$1000 per offence, according to the Fuel Tax Act.
“Every operator of a motor vehicle to which a number plate is attached as required under the Highway Traffic Act and that is found to contain coloured fuel in a fuel tank of the motor vehicle is guilty of an offence and on conviction is liable to a fine of not less than $200 and not more than $1,000,” the legislation says.
In Saskatchewan, contravening the Fuel Tax and Road Use Charge Act, which describes the regulated use of red-dyed diesel in the province, carries a fine of up to $10,000 for an individual and $50,000 for a corporation.
Although red-dyed diesel fuel may be comparably cheaper than clear diesel used for regular roads, the cost savings may not be worth the risk.
“It could be tempting to save a few bucks on fuel taxes by filling up with that red-fuel in the states and using it in Canada, but it’s a slightly more complicated situation than just your regular gas fuel up,” says Kreklewetz.
“It may not be worth the price that you’re saving in the U.S. to be running with red diesel on the roads in Canada.”
To me, it seems insane to bypass a tax enforcement method instead of simply reducing the taxes involved. But then, that’s par for the course for the current U.S. President.
I am so glad we are not subject to the kind of irresponsible, “enjoy it while it lasts” idiocy the people of the US have condemned themselves to. Taxes pay for infrastructure we all use. Hey there, Anon, you can totally do whatever the hell you please. What you CAN’T do, is choose the consequences of your actions. So I guess “enjoy it while it lasts,” you hoser.
@ Bill Brewer
No no it is not. It has been the same fuel since the late 80s.
Typical boomer stuck 40 years ago
There is a Lexus IS350 in the background of the picture of the sign, showing the diesel price. Then when I clicked on this article I was greeted with a Lexus RX suv commercial. AI targeting? I mean that was better than the endless Jeep and Ram commercials.
“100 per cent of Saskatchewan’s fuel tax revenue is legislated to be used to maintain and improve Saskatchewan’s highways and transportation infrastructure,” You would never guess that driving on the roads in Saskatchewan.
Every country in the world is in debt Mr. Anonymous.
Hey unbelievers – still think modern society changing the name of Brimstone to Sulfer will save your soul from an eternity in Hell?
Let me know when you smell the Devil at your doorstep, and please, detail his thoughts on your disbief of his odor.
Stankey mf that you will soon find to be off putting in the extreme.
Hell hath no fury than a Liberal that equates a woman’s scorn to a Valcano. The misfortune of your ignorance awaits the conclusion everyone saw coming but you.
No, it is not.
Also – who cares?
The world deserves the smell of brimstone.
I actually don’t care what Liberal laws are and do whatever the hell I please.
Its sad that intelligent people have been sufficiently paid, not to attract talent, but to make government “experts” prisoners of their employment.
Ya know who I don’t care about attracting greedy people who accept more money than their peers…?
It’s because of the blatant, screaming red flag that is people who have such benefits they are effectively excluded from the consequence of their decisions.
Those people, working in government, need to be removed.
Dyed diesel isn’t allowed ‘on road’ because it’s not taxed, but also because it’s extremely high in sulfur. The pollution factor is off the charts. Nobody mentions this.
@A commenter. Is that you Trump? Howz the 40 trillion in debt?
Trump has removed or reduced so many taxes in the US.
Imagine if we had a leader like that in Canada, instead of a good-for-nothing, rubber-stamping king / governor general who let one of the most corrupt legislatures in the world do whatever they please.
It is the same fuel. Exactly the same. In most cases the dye is injected right at the pump and comes from the same tank under ground.
All the goverment has to do is remove the tax from diesel
Of course the oil companies will just up the price across the board.
There is no more fuel available in the states or world wide if they decide to open access to dyed diesel. The supply remains exactly the same
I use purple gas in Alberta. Need to have a Farm sticker on your licence plate to be able to buy it.