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The Truth about Gas Taxes

Author: Richard Truscott 1999/05/17
Every year around the May long weekend the hue and cry from motorists about high gas prices seems to reach a fevered pitch. The attempted national boycott against gas retailers last month was only the latest expression of the growing frustration. But this outcry against gas companies has only served to shield our governments from justifying its own consumer gouging.

Originally, tax was levied on fuel to help offset the costs of building and maintaining highway infrastructure. At the time there was a clear understanding that gas taxes would be used for road development.

In more recent years, however, fuel taxes have become synonymous with "sin taxes" like alcohol and tobacco taxes and the government's perception and use of gas taxes began to change.

Today, gas taxes are an enormous source of general revenues for our governments to the point where taxes now make about 50% of the pump price.

For every litre of gas you buy, Ottawa walks away with 10 cents plus GST. The Saskatchewan government's take is another 15 cents per litre.

And these are just the surtaxes. In addition to these taxes, there is also a whole slew of gas taxes levied on the gas companies and the local retailers that is already built into the retailers portion of the price. These include royalty fees, corporate income taxes, business taxes, and property taxes, which are passed along to motorists.

But even on fuel taxes alone, Ottawa is making a killing - about $5 billion per year. Yet only a mere 5% finds its way back to Canada's roads.

Gas tax revenue has also been a cash cow for the Saskatchewan government. Each year the provincial coffers benefits to the tune of almost a half a billion dollars. But of the $475 million collected through fuel taxes and motor vehicle fees in 1998, only $212 million or 44.7% was directed back into highway maintenance, construction and repair.

Compare those numbers with Alberta, that plowed 93.5% of its gas tax revenues back into roads in 1998, or our sister province of Manitoba that found a way to direct 76% of it road tax revenues back into roads and highways.

The time has come for motorists and taxpayers to blow the whistle on government gouging at the gas pump. The Canadian Taxpayers Federation recently launched "Gas Tax Honesty Day" - a public awareness campaign that drives home two points - "the cost of gas is 50% tax," and "gas taxes are a user fee; use it or lose it."

The campaign appeals to the court of public opinion to raise awareness, educate taxpayers, and advocate a lower overall tax burden for motorists.

The purpose of the campaign is not to defend the non-taxable pump price set by Canada's oil companies, but to re-focus and re-direct consumer frustration for high gas prices at Government.

Gas taxes are at an all-time high in Canada, while the actual cost of gas is at record lows.

Ottawa and the provinces must dedicate gas taxes to rebuilding Canada's aging roads or else cut the excess tax rate from the pump price. Motorists could use the brake.

A Note for our Readers:

Is Canada Off Track?

Canada has problems. You see them at gas station. You see them at the grocery store. You see them on your taxes.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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