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Sticker Shock: Gas Prices, Gas Taxes, and the New $75 Auto Tax Sticker Shock: Gas Prices, Gas Taxes, and the New $75 Auto Tax

Author: Mark Milke 2000/05/22
With summer approaching, many Canadian families begin planning their summer road-trips: Where to go, what to pack, how long to stay, and upping the credit card limit to pay for the gas.

The Canadian Taxpayers Federation recently released its second study on gas prices and if you've ever suffered from "sticker shock" when you fill 'er up, here are some facts to be aware of, especially as half of British Columbians are about to be hit by a new auto tax.

With pump prices hovering around 70 cents a litre, 37% to 47% of every fill-up goes to governments. Taxes are by far the largest component of the gas price and as a percentage rose steadily for the last 30 years. It is only during the past year, when the base price of oil shot up from $12 a barrel to $30 that taxes, as a percentage of the fill-up, have dropped ever so slightly (as a percentage, not in actual dollars and cents.)

And what do gas taxes buy Very little from Ottawa though the provinces have a much better record. (If you've ever driven the Trans-Canada at any time since the 1950s, you'd be forgiven for thinking the federal government hasn't upgraded that highway since, oh, the 1950s.) The federal government takes in $4.7 billion every year in gas taxes and spends only 4.1%, or $194 million on roads. Watch out for that next federal pothole.

On the provincial side of things, the provincial gas tax and road spending record varies widely. Prince Edward Island spends 222% of what it takes in on roads (though the numbers are small) whereas Ontario spends only 39% of what it collects in gas taxes and related fees.

On this side of the country, BC collected $1.157 billion in gas taxes and fees last year but spent over $1.7 billion, or 148% of what it took in. Hold the applause: the provincial government swallowed over $1 billion in BC Ferries debt this past year, which skewed that statistic. Normally, it looks like the provincial government spends 54% to 80% of gas tax and automobile fee revenues on roads and transit. (One caveat: Transportation spending statistics are notoriously slippery creatures and endlessly argued over, but based on past budgets and federal documents, this is our best estimate thus far.)

Spending less on roads than a government takes in gas taxes and fees isn't necessarily bad and the CTF recommends that gas taxes be cut where that is the case. But given the federal and apparent provincial gas tax collection record vs. transportation spending, especially in greater Vancouver, it's a bit much for half of BCers to ante up for a new $75 auto tax, especially when they've long paid an extra 4-cent per litre GVRD tax.

Instead of meekly accepting that such a tax is inevitable, residents in communities from Langley to North Vancouver should tell local politicians to badger provincial and federal governments to cough up existing tax revenues for needed road improvements. And local councils should re-examine their own budgets, re-allocate existing spending, and find some tax dollars there for road and transit improvements. And taxpayers in the rest of the province must make it absolutely clear that any suggestion of new gas/auto taxes in their cities will end up as road-kill.

A Note for our Readers:

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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