The cities agenda has finally captured public attention with a slew of new reports coming forth. TD Economics has recently chimed in with a good effort along with a federal Liberal caucus task force. They join Canada's big city mayors (the C5) and the Federation of Canadian Municipalities (FCM) in trying to highlight the infrastructure deficit prevalent in all of Canada's urban regions.

But instead of heeding some of their calls for new taxing powers for municipalities, redirecting federal gasoline taxes - which contributed to Ottawa's $9.8 billion surplus for 2001/2002 - is a better remedy.

Gas taxes are a user fee that should be earmarked for road and highway renewal. Provinces generally understand this idea but Ottawa is still user-fee challenged. Of the $4.8 billion collected in federal gas taxes last year, the feds returned a paltry 2.4% ($113 million) back in provincial transfers for roadway spending; 99 percent of this amount was spent east of Ontario. Even if all infrastructure projects are counted, it is still less than 20% of almost $5 billion collected.

Ottawa's gas tax rip-off is nothing short of highway robbery. Last year, gasoline taxes accounted for an average of 42 percent of the pump price paid by motorists. Yet national, regional and city roads and highways are rife with potholes: local mechanics have never had it so good. And TD Economics and the Association of Consulting Engineers both estimate Canada's roads and highways deficit to be $17 billion.

Canadian municipalities - led by the C5 - have asked federal and provincial governments for more cash to help fund upgrades to crumbling municipal infrastructure. Cities are the primary engines of economic growth. Without improvements to core infrastructure, they will not realize their full economic potential. Fair enough.

But drivable roads are as important in rural Canada as they are in Toronto, Montreal, Calgary or Vancouver. So last week, the Canadian Taxpayers Federation (CTF) launched its 4th annual Gas Tax Honesty Day (GTHD) - a public awareness campaign to cut gas taxes and fix roads.

With the release of a new report, Filling the Infrastructure Gap, the CTF recommends that Ottawa put federal fuel taxes back in the service of municipal roads. It time for Ottawa to "use it" or "lose it" when it comes to gas taxes.

The feds should adopt the CTF's Municipal Roadway Trust program that would dedicate $2.2 billion, almost 50 percent of federal gasoline tax revenues to municipalities to draw upon for roadway development.
Accountability would be maintained with annual reports from cities, vetted by the federal Auditor General. This model provides immediate cash for stretched urban regions and provides federal accountability for spending of federal tax dollars.

The federal government should also:
· reduce gasoline tax rates to levels commensurate with road and highway funding;
· eliminate the 1.5 cent/litre gasoline tax introduced in 1995 as a deficit fighting measure; and,
· eliminate the GST charges on the tax component of the pump price.

This should not be a matter of creating new taxes, but better distributing the taxes that already exist. The Municipal Roadway Trust would make a significant contribution toward meeting the road-renewal needs of municipalities in the 21st century and allow municipalities to free up some of their existing roadway spending for other infrastructure priorities.

Long before the cities agenda became fashionable, the CTF was addressing the needs of Canada's urban regions. Now it would nice if Canada's big city mayors and the FCM got on board and endorsed the Municipal Roadway Trust model. There's no excuse not to since a copy of the CTF report was hand-delivered to FCM President Jack Layton's office in Toronto. Somebody should ask him what he thinks