Paul Martin dug in his heels this week and ruled out lowering gasoline taxes. Canadians will continue to pay through the nose for gas thanks to high oil prices and fuel taxes, which account for one third of the pump price. Prices now average more than one dollar per litre - meaning 33 cents is tax - and family budgets are being squeezed. Yet according to the Prime Minister the price hike does not mean more tax revenue for Ottawa because with higher prices consumption falls.

"The federal government does not make money from increasing gas prices," he told reporters Monday with a straight face. This is not true. For every 10 cent/litre jump in pump prices an additional $175-million in GST revenue flows into Ottawa's coffers. Gas prices are up approximately 20 cents over 2004 levels.

As for the suggestion that gas consumption falls with price spikes, Mr. Martin knows better. According to Statistics Canada, gasoline sales increase at an average rate of just over one per cent a year. In 1985 retail sales were 32-billion litres and last year sales exceeded 40-billion litres. Higher gas prices mean consumers have less savings or disposable income to purchase other goods and services.

Mr. Martin's other line of defence against reducing taxes is that the revenue is going to cash-strapped cities and lowering taxes will endanger this funding. This is absurd. Over the next five years Ottawa will provide $5-billion to cities and communities. According to the 2005 budget, the funding transfer is $600-million this year and will increase to $2-billion - equivalent to a third of total gas tax revenues - in 2009.

Budget estimates pegged total fuel tax revenues from the 10 cent/litre excise tax at $4.68-billion this year. (See data chart.) GST revenues will add another $1.35-billion. Ottawa's total take is projected to be $6-billion this year. Once the gas transfer is deducted Ottawa will be left with $5.4-billion. Even after Ottawa transfers a generous $2-billion to cities in 2009 more than $4-billion will remain in the government's kitty. All told, Ottawa will relocate $5-billion to municipalities over the next five year and collect an eye popping $30-billion from motorists. The difference between gas revenues and the gas tax transfer is a staggering $25-billion - a cushion so large it leaves taxpayers to wonder if the Prime Minister is mocking them when he says he cannot reduce gas taxes.

But then, the federal government seems generally unconcerned about the welfare of the average taxpayer. How can Liberal MPs, for example, defend charging motorists the 1.5 cent a litre "deficit elimination" gas tax when the deficit vanished seven long years ago Why do they continue to charge taxpayers for something - i.e. the deficit - that does not exist Why is GST charged on the total pump price, gas tax included This tax-on-tax scam, on average, adds another penny-and-a-half to pump prices. (In New Brunswick, Nova Scotia, and Newfoundland & Labrador the 15 per cent HST adds a stunning 3.8 cents per litre!)

Canadians cannot control the world price of oil, but there is plenty that can be done to reduce fuel taxes. A 3 cent/litre reduction will return $1.2-billion to motorists and a 5 cent/litre cut will pump $2-billion back to taxpayers. Even with such a modest gas tax reduction the federal government will still collect billions of dollars in fuel tax revenues each year.

Mr. Martin, you have no more excuses.