• CTF welcomes new data showing federal roadway spending is up.
• Taxpayers Federation repeats call for gas tax cut of 5 cents/litre.
• Conservative Government silent on gas tax relief promises.

Gas Tax Report

Ottawa: The Canadian Taxpayers Federation (CTF) today launched its 9th annual Gas Tax Honesty Campaign, marking Gas Tax Honesty Day. The yearly campaign kicks off the summer travel season for Canadian motorists. It is also the day of the year that Canadian motorists are reminded of the high tax component hidden in the price of gasoline.

CTF directors held press conferences at six gas stations across the country this morning to talk about government tax gouging. Afterwards, a handful of customers were refunded the tax component of their pump purchase by the CTF as a way to highlight the heavy tax load on gasoline.

Over the past 12 months - the period of May 2006 to April 2007 - the average cost of a litre of gasoline paid by Canadian motorists was approximately 99.2 cents. Gasoline taxes account for an average 33% of the pump price. In the past two years, the average national price of gasoline has increased by over 14 cents.

"Ottawa will collect approximately $5.2-billion in direct gasoline and diesel taxes this year. Another $1.5-billion will come from the GST," said federal director John Williamson. "The good news is Ottawa will spend $1.8-billion or 36% of its gas and diesel tax revenue on roads and highway infrastructure this year. The amount will increase to over 52% within 2 years when roadway spending is expected to top $2.6-billion. This level of spending exceeds the 50% target first advocated by the CTF in 2002. Three years ago the federal government spent only 7% of direct gas tax revenues on roads making the boost an impressive turnabout. This is a partial victory for motorists and to complete it, gas taxes need to be lower."

The CTF is calling on Ottawa to eliminate the 1.5 cent/litre "deficit elimination tax" as a first step (see details, next page); stop taxing taxes by removing the GST (and HST where applicable) charged on federal and provincial gas taxes; and reduce the federal levy an additional 2 cents. These three measures would reduce the gas tax bite by 5 cents a litre and are, in part, consistent with what Stephen Harper promised in Opposition. To date, the CTF has delivered more than 150,000 petitions to Parliament Hill demanding lower and dedicated gas taxes.

The CTF began its Gas Tax Honesty Campaign in 1999 to inform Canadians of the gasoline taxes they pay at the pumps, to ensure gasoline taxes are dedicated toward roads, and to pressure Ottawa to cut gasoline taxes not spent on road construction. In 2002, the CTF proposed a Municipal Roadway Trust - a practical model for returning half of federal gas tax revenues directly to municipalities to spend on roads and highway development and maintenance. The 2007 report is available at: http://www.taxpayer.com/pdf/Gas_Tax_2007.pdf

Canadian Gas Facts:

• Over the past 12 months - the period of May 2006 to April 2007 - the average cost of a litre of gasoline paid by Canadian motorists was approximately 99.2 cents. Gasoline taxes account for an average 33 per cent of the pump price. In the past two years, the average national price of gasoline has increased by over 14 cents.
• In 2003, Canadian municipalities spent $6.4-billion building and maintaining roads. More than eighty per cent of all roads in Canada are municipal roads.
• The federal government collects billions of dollars each year from gas and diesel excise taxes. In the 2006-07 fiscal year, Ottawa collected $5.2-billion in gasoline and diesel taxes (not counting GST revenues). In fiscal 2004, Ottawa reinvested only 7 per cent of its gas tax revenues in roads and highway development. In 2007-08, the federal government will dedicate $1.8-billion to roads and highways. This represents 36 per cent of annual gas tax revenues. By 2009-10, over $2.6-billion will be spent on road infrastructure, which exceeds the 50 per cent of gas tax revenue target first advocated by the Canadian Taxpayers Federation in 2002. This turnabout is a partial victory for taxpaying motorists. To complete it, gas taxes need to be lower.
• GST is charged on the full pump price, gasoline taxes included. It is a tax-on-tax. In 2007-08, the federal government will collect $1.5-billion in gasoline GST revenues. Last year, Ottawa collected nearly $1.8-billion from GST on gasoline. (The tax bite was eased to some extent as a result of the one point GST reduction.)
• The federal government benefits from higher gas prices. As the pump price increases so too does the GST. For every 10 cent increase in the price of gasoline, Ottawa's GST revenues rise by $150-million.
• As a deficit reduction measure in 1995, Ottawa increased the federal gasoline tax from 8.5 to 10 cents per litre. The deficit was vanquished a decade ago, but the tax remains and the federal government's gouging at the pumps continues even with multi-year, multi-billion dollar federal surpluses. All said, the federal gasoline tax increased by 567 per cent between 1985 and 1995 - rising from 1.5 to 10 cents per litre.
• In opposition, the Conservatives made repeated promises to remove the GST tax-on-tax bite and pledged to remove the GST completely when gasoline prices exceeded 85 cents per litre. In the summer of 2005, Mr. Harper was quoted saying that gas taxes could be reduced by as much as 5 cents a litre.
• The 2006 and 2007 Conservative budgets failed to lower gas taxes although roadway spending is substantially increased.