Saskatchewan motorists will be pleased to know that all of the tax dollars collected at gas pumps across the province this year will be put back into road construction and repair. However, the fight against tax gouging at the pumps and the push for gas tax accountability continues.

If spending gas tax revenues for non-road purposes sounds strange, you should know it used to be the practice rather than the exception.

In 1998, the federal government collected billions of dollars in gas taxes, but only put 2 per cent back into road work nation-wide. Including provincial and municipal fuel tax revenue and spending, only 18 per cent of what was collected at the pumps in Saskatchewan that year actually made their way back into Saskatchewan roads. Other provinces had similar stories.

That’s why the Canadian Taxpayers Federation launched “Gas Tax Honesty Day” campaign 12 years ago – to educate taxpayers nation-wide about how much was collected, how it was used and to pressure governments to put all fuel tax revenue back into road work.

Today, after 12 years of drawing attention to the issue through annual press conferences across the country, guest columns in newspapers and delivering more than 150,000 petition signatures to politicians, the situation is much better. This year, more than 100 per cent of fuel tax revenue will be put back into roads in most provinces across the country, including Saskatchewan.

This year fuel tax revenue in Saskatchewan is expected to be $512 million while spending on roads is estimated to be $515 million. Indeed our politicians have listened.

In fact, provincial politicians passed a law back in 2007 which required all provincial gas and diesel tax revenue to be put back into roads; and so they should be. After all, governments shouldn’t just tax things because they can, taxes should serve as user fees for public services wherever possible. That way those that demand services are responsible for paying for their demands.

The next step is for the federal government to follow Saskatchewan’s lead and pass similar legislation to ensure federal gas tax revenues aren’t ever siphoned off again and used for other purposes. To make it easy for them, we’ve even drafted the legislation; all they have to do is pass it.

While they’re reviewing the matter, they should also put an end to the practice of applying the GST on top of all other taxes; a classic ‘tax-on-tax’ situation. In other words, the pump price is calculated by the cost of gasoline, plus provincial and federal gas taxes, totalled and then the GST is applied on top of it all. It’s not hard to understand how taxes make up 30 per cent of the average pump price in Saskatchewan.

Finally, we need some accountability on the “deficit elimination” gas tax; a 1.5 cent fuel tax that was introduced by Paul Martin in 1995 to help slay the deficit. However, while the deficit was eliminated in 1998, the government kept the tax. The next time the deficit is eliminated, the tax should follow.

Clearly great progress has been made in terms of how fuel taxes are used, but there’s more work to do.

By: Colin Craig
Posted: May 25, 2010
Topic: Saskatchewan

Contact the regional director Colin Craig for further information.

Type: Commentary

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