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Gas Taxes - On What is to be Done

Author: Mitch Gray 2000/09/21
Motorists have been besieged by highway robbery at the gas pumps but the political rescue team is nowhere to be found.

The absence of any political leadership on the pump price crisis is deafening at a time when motorists and homeowners are turning to their elected representatives to help ease the financial pain with a gas tax cut.

As pump prices climb by the day, taxpayers' patience is wearing thin. To compound matters, they've been caught in the crossfire between Ottawa and the provinces over a war of words. Leadership on the pump price crisis is sorely lacking.

Governments have done a fantastic job of leveling blame elsewhere for high pump prices but have done precious little to make gas more affordable.

Ottawa refuses to act on a gas tax cut without bringing the provinces on board. The provinces fire back at Ottawa for fleecing motorists without spending on roads.

Together, they lambaste on the oil producing countries for closing the taps on oil production. And they spare no quarter for the national oil companies who are accused of price fixing.

Ottawa and the provinces should stop passing the buck and begin a dialogue to make pump prices more affordable by lowering taxes.

Alberta Premier Ralph Klein should be congratulated for offering to match federal excise tax cuts penny for penny, and for instituting an energy rebate program. The province is a leader in reducing fuel costs, but could do more by lowering provincial gasoline taxes unilaterally.

For the benefit of motorists, both layers of government should put these proposals on the table without delay.

The federal government should:

  • eliminate the 1.5 cent gas tax introduced in 1995 as a deficit fighting measure;
  • lift the GST off the taxable pump price to put an end to tax on tax;
  • and finally, make gas taxes a user fee. Ottawa cannot forget its responsibility to return the balance of those fuel taxes back into road renewal.


The Alberta government should:

  • redirect some of its revenue growth from other cash cow taxes to lower Alberta's 9 cent gas tax;
  • pass legislation making gas taxes a user fee by dedicating them to road renewal.


It is not inconceivable that Ottawa will restore funding to Alberta roads. The day that happens, the province will no longer be as pressed to spend the greater share of its gas tax revenues on road renewal, and not unlike Ottawa, will likely find less worthy spending priorities.

A legislated gas tax user fee will ensure that the current practice of spending the full complement of fuel taxes on Alberta roads continues indefinitely.

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Federal Director at
Canadian Taxpayers
Federation

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