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Noxious gas smell coming from government

Author: Adrienne Batra 2005/07/11
Before you get into a verbal spat with your local gas station about the rising costs of gasoline, consider this: 38 per cent of the pump price is taxes. The pump price motorists pay can be broken down into four components: crude oil costs, refining costs, retailer's profit margin and gas taxes. Depending on where you live in Manitoba, federal and provincial taxes account for 28 cents/litre of gasoline. But the madness does not end there, the much reviled goods and services tax (GST) is charged not only on the price of gas, it is also tacked onto the tax component, meaning, a tax on tax.

Believe it or not, Manitobans are not the worse off in the country. With a 16 percent provincial fuel tax, Manitoba beats Saskatchewan (18 percent), Ontario (19 per cent) and Quebec (a whopping 23 per cent). Atlantic Canadians are hit pretty hard by the 15 per cent Harmonized Sales Tax (HST) - so where is the relief you might ask Not surprisingly, it is in Alberta where the provincial gas tax rate sits at 11 per cent.

The original argument for imposing higher gasoline taxes was to curb consumption. But consumption has chugged along and so has governments' tax take. Between 1985 and 2003, gasoline sales steadily increased at an average rate of just over one per cent per year. According to Statistics Canada, retail gasoline sales in 1985 were just over 32 billion litres and just over 40 billion litres in 2004.

In the meantime, Ottawa is making a killing. In the 2004-2005 fiscal year, the federal government collected $4.5-billion in combined federal gasoline and diesel taxes, an 18 per cent increase over what was collected ten years earlier. One explanation for the rise is the steady increase in gasoline tax rates. The federal gasoline levy increased 567 per cent between 1985 and 1995 - from 1.5 cents per litre to 10 cents per litre.

Many of these tax hikes were sold to Canadians as a way to reduce the federal deficit. In 1995, the year Ottawa's gasoline tax jumped from 8.5 to 10 cents per litre the hike was labeled a "deficit elimination measure" by then-Finance Minister Paul Martin. Canada's deficit was vanquished in 1997-1998, but the tax remains and the federal government's gouging at the pumps continues even with multi-year, multi-billion dollar federal surpluses. To add insult to injury, at current price levels, Ottawa's take will increase pumping another $175 million over the next year into federal coffers courtesy of GST revenues.

It is time Ottawa end its gas gouging. This can be accomplished with three easy steps. First, Ottawa should end its GST/HST tax on tax bite. This will lower the price, on average, by 1.5 cents a litre. Next, scrap the deficit elimination tax, which will save another penny and a half. Lastly reduce the federal levy by 2 cents, bringing the total saving to motorists to a cool 5 cents a litre.

The rising price of gasoline is not only felt by the individual driver, but businesses across our province are feeling gas price pains as well. Transportation companies have to make up the cost of rising prices from someone, and that will be the end consumer. All will be affected by high gas prices, but none more than individual taxpayers. This highway robbery must come to an end.

So if you feel the need to blame someone for the pain you're feeling at the pumps, you can focus your sights squarely on the government. Only public pressure from Canadians will motivate politicians to give us a break at the pumps.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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