• New report shows Ottawa spends only 7.2% of gas taxes on roads.
  
• CTF critical of plans to exclude roadway spending in gas tax transfer.
  
• CTF repeats call for federal government to dedicate 50% of gas taxes to roadway development and for a gas tax cut of 5 cents/litre.

Gas Tax Report

Ottawa: The Canadian Taxpayers Federation (CTF) today launched its 7th annual Gas Tax Honesty Campaign, marking Gas Tax Honesty Day. The yearly campaign kicks off the summer travel season for Canadian motorists.

The CTF began its Gas Tax Honesty Campaign in 1999 to inform Canadians of the gasoline taxes they pay at the pumps (see gas facts, below, for updated figures), to ensure gasoline taxes are dedicated toward roads, and to pressure Ottawa to cut gasoline taxes not spent on road construction. In 2002, the CTF proposed a Municipal Roadway Trust - a practical model for returning half of the federal gas tax revenues directly to municipalities to spend on roads and highway development and maintenance.

The 2005 gas tax report is available by Clicking here

In addition to implementing a MRT-style model, the CTF is calling on Ottawa to eliminate the 1.5 cent/litre deficit elimination tax as a first step; stop taxing taxes by removing the GST (and HST where applicable) charged on federal and provincial gas taxes; and reduce the federal levy by 2 cents. These three measures would reduce the gas tax bite by 5 cents a litre. To date, the CTF has collected more than 115,000 signatures in favour of its MRT and gas tax cut initiative.

This year's gas tax report examines the federal-provincial gas tax transfer deals in place between Ottawa and British Columbia and its municipalities, and between Ottawa and Alberta.

"Sharing gas taxes with municipalities should be commended, yet these agreements miss the mark. The construction and maintenance of roads, highways and bridges are ranked as a secondary priority in terms of funding" said federal director John Williamson. "These agreements fail to acknowledge the burden municipalities face with road construction and maintenance or the importance of using gas taxes to mend roads. It will not be local municipal leaders but federal bureaucrats armed with terrain maps and funding formulas who will determine local funding priorities. Road upkeep is still not a priority for Ottawa."

Canadian Gas Facts:

Of the $4.5-billion collected in federal gasoline and diesel taxes in 2004-2005, Ottawa returned a paltry 7.2% or $324-million back in provincial transfers for road and highway development. In addition, Ottawa collected $1.198-billion in gasoline GST revenues.

Over the past 12 months - the period of May 2004 to April 2005 - the average cost of a litre of gasoline paid by Canadian motorists was approximately 84 cents. This represents a 10-cent increase over last year's average price. Taxes account for an average 38% of the pump price. Gasoline prices have now jumped to a weekly average price of approximately 90 cents per litre, and have regularly surpassed $1 per litre in parts of the country.

GST is charged on the full pump price, gasoline taxes included. It is a tax on tax. As the pump price increases so too does the GST. Last year, the federal government collected $1.198-billion in gasoline GST revenues. For every 10 cent increase in the price of gasoline, Ottawa's GST revenues rise by $175-million.

As a deficit reduction measure in 1995, Ottawa increased the federal gasoline tax from 8.5 to 10 cents per litre. The deficit was vanquished seven years ago, but the tax remains and the federal government's gouging at the pumps continues even with multi-year, multi-billion dollar federal surpluses.

The federal government's priorities are not road maintenance or construction. Minister of State for Infrastructure and Communities John Godfrey stated in the House of Commons on May 19th, 2005, that "the purpose of the gas tax is to invest in environmentally sustainable municipal infrastructure - It could be public transit, waste, wastewater, waste management or community energy systems." Subsequently, he added, "We wanted to direct the bulk of [gas tax] money toward public transit and water projects so that when we had made our investments, we would be able to reduce greenhouse gas emissions and clean up water and air." In February, 2005, the infrastructure minister had stated gas tax revenues could be directed toward roads and bridges.

In 2003, Canadian municipalities spent $6.4-billion building and maintaining roads. More than eighty per cent of all roads in Canada are municipal roads.