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There are 12 billion reasons to cut gas taxes

Author: Walter Robinson 2000/09/20
So let's get this straight. Ottawa raked in a $12 billion surplus last year but Finance Minister Paul Martin refuses to lower federal gas taxes. Broken down, $12 billion is 12,000 million dollars. If you had a dollar for each second that passed, it would take 380 years, six months and four days to reach $12 billion. That's a lot of money, n'est pas?

Coincidentally, the federal and provincial governments collected about $12 billion (expected to rise to $13 billion this year) last year in fuel taxes from Canadian motorists.

Paul Martin also says he won't even consider the idea of lowering fuel taxes unless the provinces jump on board with him so that consumers can see a "substantive" price reduction at the pumps as a result of joint federal-provincial tax cuts.

Mr. Martin is entering the territory of unbridled duplicity and doublespeak with this caveat. This is the same Paul Martin that hiked the federal excise tax from 8.5 cents/litre to 10 cents/litre in 1995 as a deficit fighting measure. This measure was supposed to raise revenues by $500 million, but it has been much more damaging than that!

Well, well, well. The last time we checked, Minister Martin didn't consult the provinces on this tax hike in 1995. He didn't receive their consent or permission so it stands to reason, he doesn't need it now. Moreover this stand is one of obfuscation and intransigence to mask the bigger problem, a lack of courage and will to do the right thing.

And I write this more in sadness than in anger because just six short months ago, Minister Martin made the courageous decision to re-index the tax system to inflation and eliminate bracket creep. In doing so, he defied the advice of pollsters and pundits and made a policy decision that was right for taxpayers even though the political benefits were dubious.

It is almost certain that he is getting this same advice now. You can almost hear the spinmeisters at L'esplanade Laurier in Ottawa saying "don't do it Paul, there is little political gain." "What if you cut taxes and prices still go up? What then?" Such short-term thinking defies logic and fundamentally misjudges the mood of the Canadian taxpayers.

First and foremost, everyone is cognizant of the record prices per barrel for crude oil. In addition, the papers are littered with stories of the internal politics of OPEC. And now, reports of new tensions between Iraq and Kuwait also threaten to drive crude prices higher. Taxpayers are not asking Paul Martin to bring peace to the Middle East. What they are asking is that Canadian politicians, of all partisan stripes, rein in and lower Canadian gas taxes.

This issue is begging for leadership. Paul Martin -- if he is willing to seize the issue - can fill this void. By lowering gas taxes by 1.5 cents/litre, he will be eliminating a tax that has now reason to exist now that the budget is balanced. In turn, his call for a joint federal-provincial strategy will then, and only then, resonate with taxpayers and in the provincial corridors of power. Provincial governments will be forced to the table to start cutting their gas taxes.

Before long, we will have combined gas tax cuts in the neighbourhood of four and five cents per litre, if not more. Given the hyper price sensitivity of consumers (remember, gas is the only product you can window-shop for at 120km/hour), it would be commercial suicide for "big oil" not to ensure that this cut is passed through to motorists in the form of sustained lower pump prices.

If "big oil" doesn't, then the protests we saw in Europe last week and Spain and Tel Aviv this week will be replicated in Toronto, Ottawa and a multitude of other Canadian cities.

Ending federal bracket creep was a mark of leadership. It's too bad that Mr. Martin is now choosing soundbites instead of leadership.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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