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Gas Tax Trial Balloon Full of Hot Smokey Air

Author: Richard Truscott 2002/08/12
There's simply no other way to put it: any talk from the Liberal government in Ottawa about new gas taxes is irresponsible and hypocritical.

Transport Minister David Collenette (himself a Toronto MP) stirred up a hornets nest during a recent speech to a conference on globalization and cities held in Ontario. Collenette said he wanted the federal government to consider an extra tax on gasoline sold throughout Canada to pay for more buses, subways, and road construction in Canada's major (read: not in Saskatchewan) cities.

He went on to state: "The bottom line is that more money has to flow to deal with the problems of cities. However, we do it is fine with me."

Higher gas taxes Stable revenue for urban infrastructure More money for public transportation in big cities

What is the Minister talking about Either he's just blowing smoke, or he's been smoking something. His comments lead to one simple question: What the heck has the federal government been doing with the billions in revenue it already rakes in from federal gas taxes

Last year alone, Ottawa generated over $4.8 billion in gas and excise tax revenue but only returned a miniscule $113 million or 2.4% in the form of transfers for provincial roadway development. Even if ALL federal infrastructure (including money for sewers and bridges) is added in, the feds still only returned less than 20% of its tax take from motorists at the pumps.

Put another way, Ottawa pockets $4 billion into general revenues each and every year courtesy of Canadian motorists. It doesn't go into roads. It doesn't go into bridges, or even sewers. It goes into the government's general coffers to be spent (or sometimes wasted) on everything else under the sun but roads and highways.

Why doesn't the federal government simply divert more of the tax money they squeeze out of motorists at the pumps into public infrastructure across the country, including our deteriorating roads

In May of 2002, as part of its annual Gas Tax Honesty Day, the Canadian Taxpayers Federation proposed a new Municipal Roadway Trust program that would devote $2.2 billion of the existing gas tax revenues annually for three years for roadway construction and repair. This would allow municipalities to redirect more of their own resources to other budget priorities, such as public transit and waterworks in the bigger urban centers or local road rehabilitation and tax relief in rural parts.

Accountability would be ensured through annual reporting from municipalities receiving the funding and at least some verification and oversight of the trust fund by the federal Auditor General. This model would deliver immediate cash for over-stretched municipalities while providing accountability to taxpayers for the federal funds spent.

Each time Canadian motorists fill up their gas tanks, 42% of the bill is tax. Taxpayers already pay their fair share at the pumps. The federal government, and its ministers, need to exhale, take a deep breath of fresh air, and use the billions it already rakes in through existing gas taxes before they begin hallucinating about some new charge on motorists.

If they don't come to their senses soon, Minister Collenette and his government will have truly hit the high way.

A Note for our Readers:

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Canada has problems. You see them at gas station. You see them at the grocery store. You see them on your taxes.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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