There's No Excuse for High Gas Taxes
Paul Martin dug in his heels this week, ruling out lower gasoline taxes that, with prices averaging $1 per litre, account for 33 cents on every litre purchased.
Family budgets are being squeezed by record high prices, yet the Prime Minister maintains higher prices reduces consumption and insists "The federal government does not make money from increasing gas prices."
This is not true. For every 10 cent/litre jump in pump prices an additional $175-million in GST revenue flows into Ottawa's coffers. Gas prices are up approximately 20 cents over 2004 levels.
Despite the increase, gas consumption is rising. Statistics Canada reports that gasoline sales increase at an average rate of just over 1% a year. In 1985 retail sales were 32-billion litres and last year sales exceeded 40-billion litres. Higher gas prices mean consumers have less savings and disposable income.
Mr. Martin's other line of defence against reducing taxes on gas is that the revenue is going to cash-strapped cities and lowering taxes will endanger this funding. This is absurd. Over the next five years Ottawa will provide $5-billion to cities and communities. According to the 2005 budget, the funding transfer is $600-million this year and will increase to $2-billion, which is equivalent to a third of total gas tax revenues, in 2009.
Budget estimates pegged total fuel tax revenues from the 10 cent/litre excise tax at $4.68-billion this year. GST revenues will add another $1.35-billion. Ottawa's total take is projected to be $6-billion this year. Once the gas transfer is deducted Ottawa will be left with $5.4-billion. Even after Ottawa transfers a generous $2-billion to cities in 2009 more than $4-billion will remain in the government's kitty.
All told, Ottawa will relocate $5-billion to municipalities over the next five years and collect an eye-popping $30-billion from motorists. The difference between gas revenues and the gas tax transfer is a staggering $25-billion, a cushion so large it leaves taxpayers to wonder if the Prime Minister is mocking them when he says he can't reduce gas taxes.
But then, the Liberal government seems unconcerned about the welfare of the average taxpayer generally. How can Liberal MPs, for example, continue to defend charging motorists the 1.5 cent a litre "deficit elimination" gas tax when the deficit vanished seven long years ago? Why is GST charged on the total pump price, gas tax included? This tax-on-tax scam, on average, adds another penny-and-a-half to pump prices. (In New Brunswick, Nova Scotia, and Newfoundland & Labrador the 15% HST adds a stunning 3.8 cents per litre.)
Canadians cannot control the world price of oil, but there is plenty that can be done to reduce fuel taxes. A 3 cent/litre reduction will return $1.2-billion to motorists and a 5 cent/litre cut will pump $2-billion back to taxpayers. The Prime Minister has run out of excuses. Gas taxes must be reduced. Anything less will inflict unnecessary economic hardship on families and the Canadian economy.
Family budgets are being squeezed by record high prices, yet the Prime Minister maintains higher prices reduces consumption and insists "The federal government does not make money from increasing gas prices."
This is not true. For every 10 cent/litre jump in pump prices an additional $175-million in GST revenue flows into Ottawa's coffers. Gas prices are up approximately 20 cents over 2004 levels.
Despite the increase, gas consumption is rising. Statistics Canada reports that gasoline sales increase at an average rate of just over 1% a year. In 1985 retail sales were 32-billion litres and last year sales exceeded 40-billion litres. Higher gas prices mean consumers have less savings and disposable income.
Mr. Martin's other line of defence against reducing taxes on gas is that the revenue is going to cash-strapped cities and lowering taxes will endanger this funding. This is absurd. Over the next five years Ottawa will provide $5-billion to cities and communities. According to the 2005 budget, the funding transfer is $600-million this year and will increase to $2-billion, which is equivalent to a third of total gas tax revenues, in 2009.
Budget estimates pegged total fuel tax revenues from the 10 cent/litre excise tax at $4.68-billion this year. GST revenues will add another $1.35-billion. Ottawa's total take is projected to be $6-billion this year. Once the gas transfer is deducted Ottawa will be left with $5.4-billion. Even after Ottawa transfers a generous $2-billion to cities in 2009 more than $4-billion will remain in the government's kitty.
All told, Ottawa will relocate $5-billion to municipalities over the next five years and collect an eye-popping $30-billion from motorists. The difference between gas revenues and the gas tax transfer is a staggering $25-billion, a cushion so large it leaves taxpayers to wonder if the Prime Minister is mocking them when he says he can't reduce gas taxes.
But then, the Liberal government seems unconcerned about the welfare of the average taxpayer generally. How can Liberal MPs, for example, continue to defend charging motorists the 1.5 cent a litre "deficit elimination" gas tax when the deficit vanished seven long years ago? Why is GST charged on the total pump price, gas tax included? This tax-on-tax scam, on average, adds another penny-and-a-half to pump prices. (In New Brunswick, Nova Scotia, and Newfoundland & Labrador the 15% HST adds a stunning 3.8 cents per litre.)
Canadians cannot control the world price of oil, but there is plenty that can be done to reduce fuel taxes. A 3 cent/litre reduction will return $1.2-billion to motorists and a 5 cent/litre cut will pump $2-billion back to taxpayers. The Prime Minister has run out of excuses. Gas taxes must be reduced. Anything less will inflict unnecessary economic hardship on families and the Canadian economy.