The Canadian Taxpayers Federation (CTF) is pointing out that while taxpayers struggle with the high costs of gasoline, the federal and provincial governments stand to make millions in extra tax revenue. Last night, gas prices in Nova Scotia went up about 4.5 cents. The CTF estimates that for every one cent the average yearly price increases over last year, Nova Scotians pay an extra $2.4 million in HST on gasoline.

“Government stand to be big winners of high gas prices. As taxpayers struggle to afford to put gas in their cars, the government takes more in taxes,” says Kevin Lacey, Atlantic Director of the Canadian Taxpayers Federation. “Governments should not be making money off our misfortune.”

Calculations done by the CTF estimate that for every 1 cent increase in gas prices (includes diesel) over 2010 levels (Jan 1^st, 2010 – Dec 31^st 2010), federal and provincial governments rake in $2.4 million in extra HST ($1.6 million to the provincial government, $808,035 to the federal government). So far in 2011, gasoline prices are on average 11.5 cents higher per litre than in 2010, while diesel prices are up 18.1 cents. If the annual prices remain at this level, taxpayers over an entire year will shell out an additional $32,187,071 in HST for 2011 over 2010. *

The CTF is calling on the government to reduce taxes paid on gasoline to help ease the pain of high gas prices. Specifically governments should:

• Give the Nova Scotia Utility and Review Board the power to change the provincial tax on gasoline to ensure governments do not earn windfall tax revenue from higher gas prices.
• Eliminate the tax on tax: HST is charged on the price of gasoline after other gasoline taxes have been added, this amounts to a tax on tax, and means the federal government alone in 2010 collect $650 million extra in gas taxes across Canada.
• Reduce the overall taxes: government should cut gas taxes and give people a break on the overall tax rate.

“The government claims there is nothing it can do about high gas prices. Taxpayers shouldn’t accept this explanation since governments stand to make millions if prices stay high,” adds Lacey.

About 35 per cent of the total gas price in Nova Scotia is federal and provincial taxes.

Note: Gas prices used in these calculations was the minimum price of regular unleaded and low sulfur fuel in the Halifax Regional Municipality.