Consumer and Commercial Relations Minister Bob Runciman is blowing smoke with yet another tiresome review of gasoline prices. Why not try something out of the ordinary and propose an investigation of monopolistic gas tax gouging instead
Rarely do you hear a peep out of politicians -- hot and bothered by those demonic oil barons -- about high gas taxes. And for good reason: if they were to raise Cain about gas taxes consumer rage would be targeted at the politicians themselves.
Since they were first elected in 1995, the Harris Tories have reduced spending on transportation and downloaded 85% of Ontario's roads to municipal governments. And Auditor General Erik Peters recently noted that only 44% of Ontario's roads were in good shape.
Numerous studies over the past two decades have looked for evidence of the "great gas-price-fixing conspiracy", yet the have found nothing. Despite lower spending on roads, lower fuel taxes have not followed. At the same time Ontario politicians are quick to point a finger at the oil companies or the federal government.
Are the oil companies out to make a profit Yes, of course they are, that's normal. What is abnormal is that the federal and provincial governments make far more off of each business transaction at the pumps than do oil companies or retailers. Both Ottawa and Queen's Park take over 40% of the pump price, leaving the gas bar retailer with an operating margin of about 12%. The rest is split between crude costs and refining.
The pump price today for regular gas excluding taxes is only 38-cents per litre. Not terribly unreasonable considering gas prices, adjusted for inflation, have actually fallen since 1957. It's the 26-cent per litre tax on top of today's pump price that goes unchecked, and pardon the pun, unpaved.
Of the $5 billion in fuel taxes collected by Ottawa, only 6% finds its way back into our roads. And Queen's Park, while putting 57% of provincial gas tax revenues into transportation initiatives -- half of which is spent on roads - still pockets 43% for other spending programs not related to roads or highways.
Politicians cannot control raising crude costs (from $11/barrel in January `99 to $26/barrel today) and other market variables. They can however release the stranglehold on motorists by lowering and reforming gas taxes. Ontario's has one of the greedier takes at 14.9 cents/litre.
Oil companies already pay a battery of taxes to government - corporate income taxes, payroll taxes, royalties, property taxes, business taxes, etc. Then you add federal and provincial excise tax at the pumps. Add on top of that the GST, and consumers are pumping not only gas, but also a tax on a tax on a tax every time they fill 'er up! The GST is controversial enough, but at the pumps we pay the GSTT (Goods and Services and Tax Tax).
To restore some semblance of sanity to our fuel costs, Ottawa should eliminate the GST charges on the tax component of the pump price. Secondly, Ottawa and the Ontario should reduce gas taxes and motor vehicle fees to levels commensurate with road development and public infrastructure initiatives only.
Motorists are right to be angry about volatile pump prices, but most of this frustration is misdirected. The anger should be reserved for government. The bash-the-gas-company-rhetoric keeps motorists spinning their wheels on an oil patch placed by politicians who should be subjected to a gushing spill of scrutiny for their own consumer tax gouging.
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