A matter of tax fairness

Technicians are badly in need of a tax break on their tools. The ability to deduct the cost of expensive tools that are essential for employment seems like common sense.

But finance minister Paul Martin is not likely to agree because his advisors consider it would open the ‘floodgates’ for others to request deductions for everything from business suits to paper clips, according to sources in Ottawa.

After years of effort, some lobbyists and observers consider that technicians have never been closer to achieving the long sought-after goal. But that’s little comfort to technicians themselves.

It’s been almost 20 years since the issue first went before the federal government’s powerful finance committee. The committee has recommended it twice before, yet no action has ever been taken when it counts most, on budget day.

Two private members bill have also been introduced – without success. Last year, the issue made the short list, the top 10 items that come before the finance minister as ‘other business,’ but was killed before it could get any further.

Technicians and their representative associations have been down a long road on this issue, and it has resulted in a level of recognition about the issue among some politicians.

If tool tax deductibility is approved, it will cost the federal government approximately $50 million in forgone revenue, according to lobbyists with the Canadian Automobile Dealers Association.

While this is obviously a large amount of money, its dimensions are reduced taken in the context of the federal government’s overall operating budget, which is approximately $100 billion.

CADA lobbyists say major objections to the issue come from finance department bureaucrats, who have argued against it for fear it will set a precedent, which could open the floodgates for others to come forward requesting the same consideration. Technicians and their supporters say only the auto service industry requires its members to make such major and mandatory employment-related expenditures.

Apprentice technicians must purchase a tool set which can costs thousands of dollars before they can gain employment.

Technicians speak for trade

In an attempt to successfully persuade politicians to approve a tool tax deduction, industry strategists put a more human face on the issue by having two technicians make presentations to the finance committee.

Jennifer Tomas, a technician from Ontario and Martin Smith, who lives and works as a technician in Manitoba, explained the importance of the issue.

Here is what they told House of Commons finance committee.

Martin Smith said “Just over 18 years ago, I was looking for a way to get into the mechanical field in the automotive trade.

“At that time, the unemployment insurance was sponsoring a co-operative course through a community college and I applied for it and I got it, which means I was sponsored by unemployment. It was 50% theory and 50% on the job training.

“At the end of that course, I was offered a job at the GM dealership I work at presently, but as a condition of that employment, I had to purchase tools in order to fulfill my job abilities.

“I purchased approximately $3,500 worth of tools, which doesn’t seem much, but at that time, the expected salary was only about $21,000 and for a young family just starting out, it was quite a burden. We had no choice but to do it. I couldn’t keep a job or maintain a job without tools.

“Over the next four years, I purchased about $3,000 worth of tools every year. To this day, I have approximately $30,000 invested and every year I purchase about $1,000 worth of tools to maintain a level of efficiency and to keep up with the changing technologies in vehicles.

“The tools are always changing and being updated. To me it seems very unfair for us not to be able to deduct any of these from our income tax at all.

“I’ve recently learned of musicians and chainsaw operators, I know for a fact that electricians and plumbers are able to deduct things from their income tax because they need them for their businesses, in order to operate, for their jobs.

“We feel that we’re just average Canadians earning a middle income and we feel we deserve a tax break in this area.

“If something isn’t done in the near future, we’re going to lose our field. The automotive trade is very highly technical, very highly advanced, and we need young, bright people to get into this field to keep up with the technologies.

“Training is very vast and ongoing. Presently, the enrolment in schools has dropped off. People coming out of school looking for an occupation to get into will want to go into an occupation where they don’t have to incur any costs.

“Electricians can write off their tools. A musician can write off his instrument, an artist, his brushes. But in the automotive trade, you have to go out and purchase approximately, in today’s society, about $5,000 worth of tools to start.

“They’re (potential apprentices) dropping off. They’re going to the easy road, stuff where they can make more money and they don’t have to dish out in order to make this money and it’s less.”

Jennifer Tomas said “I started in the trade five and a half years ago as a lube technician and I was being paid $8 an hour. I was told in the job interview I needed to have my own tools, but having worked on my own car for years, I thought I had plenty and I walked into work that first day carrying my tool box.

“I quickly learned that working on my own vehicle in the driveway and working for a garage are two very different things.

“I needed all kinds of special tools that I’d never used before including air tools. I had no money, I had two children to support, and I badly needed the job.

“Other mechanics helped me out initially by loaning me their tools but made it clear that if I lost or broke a tool, I would have to replace it.

“The price of the tools that I needed was a definite deterrent to staying in the trade.

“Slowly, I began buying essential tools and by the end of that first year I had purchased roughly $1,400 worth of tools. Today I have approximately $15,000 invested.

“Most of them are from Canadian Tire, Sears, Walmart, and Princess Auto, although I do own some Snap-On and Mac tools. I buy these more expensive tools only when I have to.

Mac and Snap-On are the tool suppliers that make specialty tools. They work closely with our industry to develop tools as vehicles are redesigned, creating a demand for redesigned tools, but at a premium price.

“During the course of a day I am in and out of my tool cabinet hundreds of times choosing the right tools for what I’m working on. If I don’t have the proper tools, I can’t do my job.

“Because I’m paid on a flat rate system, the more time I spend searching for a tool the less I earn.

It is essential that I stay current in my trade. Not only by constantly learning new designs of vehicles, but also by purchasing the tools I need to work on these new designs.

“A large percentage of my tools are designed for use in a shop where compressed air is the source of power. These tools are two or three times as expensive as the hand tools commonly used by other trades such as electricians, plumbers or millwrights.

“While our dealership provides each technician with a work bench and a hoist, it’s up to the individual to supply their own tools.

“Dealerships are able to use their equipment purchases as a business deduction, but technicians are not.

“In the 20 or so compartments of my tool cabinet, each tool has a specific use.

When I pull open a drawer, I’m looking for a specific tool. Even with $15,000 invested there are several tools I still need and none that I can manage without.

“When I lock my cabinet up at night, if one pair of pliers is not accounted for or even if one of my more than 300 sockets is missing, I can’t continue working without the lost tool, so I have to replace it immediately. It doesn’t matter what it costs.

“I’m in and out of several vehicles every day and occasionally I lose a tool. Many of my sockets cost between
$5 and $20 each. A set of pliers is easily worth more than $25.

“As long as I work in this trade I will need to invest in tools. We need tax fairness.”