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New Manitoba legislation paves the way for fuel tax reform

Author: David Maclean 2004/03/10
The Manitoba government announced plans to implement new legislation that could finally usher in a taxpayer-friendly approach to how our gas tax dollars are spent. It's a model that Saskatchewan needs to adopt if we truly want to address our festering problem of municipal infrastructure deficits.

Manitoba's Gas Tax Accountability Act, to be debated and likely passed this spring, establishes a new set of rules for the hundreds of millions in fuel tax dollars collected in that province. The Act requires the government to annually report to the legislature the amount of fuel tax dollars collected in the past year, and the total amount spent on road-related infrastructure. It further requires the government to spend at least what it collects from fuel taxes on highways and roads in all future years.

Here's the best part: the Manitoba legislation lays the groundwork for a much anticipated "new deal" for cities long promised by Prime Minister Paul Martin. Adopting a long-held Canadian Taxpayers Federation (CTF) position, the Prime Minister is publicly musing about sharing a portion of the federal fuel tax revenues with municipalities.

One problem with this idea is that the feds can't provide direct assistance to municipalities without going through the province first. Manitoba's proposed legislation provides an opening for Paul Martin to come through with much-needed fuel tax sharing with municipalities, by providing the mechanism to transfer the funds. In Saskatchewan this is a major obstacle, as our government shows no interest in passing a similar law.

The way Ottawa spends our fuel tax money desperately needs reform. Last year the federal government collected $4.8 billion in gas taxes, but only transferred $119 million to the provinces for highway construction. Put simply, our federal government is subsidizing their elaborate spending programs with our gas money.

For years, the Canadian Taxpayers Federation has been advocating for a Municipal Road Trust (MRT) model for fuel taxes. The MRT calls on the government to return half of fuel tax revenues to the municipalities from which they are collected. This proposal would see a total of $60.4 million returned to Saskatchewan municipalities - up to $12 million for Regina, and $19 million to Saskatoon. Nearly $30 million would be distributed among all the other cities, towns and villages in the province.

Implementation of the CTF's MRT plan would mean steady, predictable, sustained support for our communities. It would help address the massive infrastructure deficits we've accumulated as a result of federal and provincial government's refusal to use gas taxes as they were intended to be used - as a user fee.

Manitoba's new fuel tax legislation is a model for the rest of the country. The legislation creates a level of government accountability for how fuel tax dollars are spent, and lays the groundwork for a new deal for municipalities after the next federal election.

It's time for Saskatchewan to start laying the groundwork for change as well. Many of our municipalities are financially strapped and looking to finance infrastructure by borrowing. Let's not go down this road. Let's collectively call on the federal government to come through on a new deal for our communities.

As for our provincial government, they need to show some leadership and get out of the way of progress.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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