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Taxes, roads and a whole lot of gas

Author: Sara Macintyre 2005/08/10
Ouch! Motorists are definitely feeling the pinch of higher gas prices this summer. And the west coast is more often than not home to the highest prices in the country. For those living and driving in Victoria or Vancouver, the distinction isn't all that surprising. The Capital Regional District and the Greater Vancouver Regional District (GVRD) are also home to the highest gas taxes in the country.

According to a weekly pump price survey compiled by the consulting group, M.J. Ervin & Associates, gas prices hit $1.05 in Victoria, $1.055 in Vancouver and ranged between $1 and $1.02 per litre in the Interior. The August 9th survey is already dated as fuel prices continue to rise this week with crude oil hitting a record high of $65 barrel.

But before you start shaking your fist at the local gas attendant, consider this: 30-40 per cent of the pump price is taxes! Depending on where you live in British Columbia, federal, provincial and regional taxes add 31 to 38 cents per litre to the pump price. Imagine if you could fill up for 70 cents a litre!

Adding further insult to injury, the much beloved goods and services tax (GST) is charged not only on the price of gas but on the tax component as well! It's a tax on a tax. For every 10 cent increase in the pump price, an additional $175 million in GST revenues flow into Ottawa's coffers.

Provincial taxes vary according to region in British Columbia with the highest taxes in Vancouver at 20.5 cents per litre (which includes a 12 cent levy for Translink the regional transportation board). In Victoria, the total provincial and regional tax is 17 cents per litre of gas. For all other areas in British Columbia the total provincial tax take is 14.5 cents per litre.

Last but not least, the feds take 10 cents per litre before applying GST to the entire pump price. So before your gas tank even sees one drop of fuel, regional, provincial and federal governments already have their hands on the nozzle.

Two questions need to be asked: what are taxpayers, or more specifically, motorists, getting for their money And in the face of increasing oil costs and consumption rates, when will the government cut drivers a break at the pumps

In 2004/5, the federal government raked in $4.5 billion in federal fuel taxes and $1.2 billion in gas GST revenues. Of that, Ottawa returned a paltry 7% to road and highway improvements. The remainder was funneled into the sinkhole known as "general revenues."

At the provincial level fuel tax revenue totaled $480 million while transportation improvement spending was $624 million in 2004/5. At least motorists can be assured the provincial government is using their gas dollars to improve their roads, highways and bridges. But, the biggest culprit remains the federal government and for its part there is plenty of room to give motorists a break at the pumps---especially when one considers the multi-billion dollar surpluses the feds continue to ramp up.

A good start would be to scrap the 1.5 cent per litre "deficit elimination" gas tax that Paul Martin brought in back in 1995. The deficit is gone but the tax remains. Another step would be to stop taxing the taxes, the practice is unscrupulous and certainly unnecessary. These two measures alone would save motorists between three to five cents per litre. It's a modest start but one that motorists would welcome.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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