Ever feel like placing a 9-1-1 call when you pull up to the pumps Gasoline prices are once again over 90 cents per litre, and have surpassed $1 per litre in parts of the country.

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 the province, gas taxes represent between 30% and 43% of the pump price. On average, taxes account for about 38% of the price.

The original argument for imposing higher gasoline taxes in the 1970s 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 2004, the federal government collected $4.25-billion in direct federal gasoline taxes, an 18% increase over what was collected ten years earlier. One explanation for the increase is the steady increase in gasoline tax rates. The federal gasoline tax rate increased 567% between 1985 and 1995 - from 1.5 cents per litre to 10 cents per litre.

As a deficit reduction measure in 1995, Ottawa increased the federal gasoline tax from 8.5 to 10 cents per litre. The deficit was vanquished eight years ago, but the tax remains and the federal government's gouging at the pumps continues even with multi-year, multi-billion dollar surpluses. With crude prices and consumption predicted to climb, it is past time the federal government gave motorists a break at the pump. Ottawa should eliminate the 1.5 cent deficit reduction tax.

Another contributor to growing federal gas tax revenue is the 7% GST and 15% HST - applied in New Brunswick, Nova Scotia, and Newfoundland & Labrador. The GST (and HST) is charged on the full pump price, gasoline taxes included. It is a tax paid on other taxes. As pump prices climb, Ottawa rakes in more GST revenues. Between 1996 and 2004, GST revenues from gasoline sales increased from $909-million to $1.2-billion - a 32% increase! At current price levels, the federal treasury will likely collect another $175-million - bringing total annual GST revenue from gas alone to over $1.35-billion.

The insidious GST/HST double taxation must be repealed. Prior to the last campaign - when gas prices last exceeded $1 a litre - then-Opposition leader Stephen Harper toured southwestern Ontario in a minivan to highlight his commitment to reduce gas taxes and give motorists a break. The topic was so high on his party's agenda last September that Conservative MPs asked five questions in Question Period on the issue on the first day of Parliament's fall session. "Rather than continue to rake in record high revenue from record-high oil prices, will the government simply cut gas taxes for consumers," Mr. Harper thundered in the House of Commons that day.

With Mr. Harper now in the driver's seat taxpayers await the '06 budget with some measure of hope. The Conservative Party repeatedly said - in opposition - it would stop Ottawa from applying the GST on the federal and provincial levies. In addition it would implement a convoluted process to bring down gas taxes by not charging the GST if and when gas prices exceed a certain price point. In the 2004 election, the threshold was set at 85 cents a litre, but last year the Conservatives said it could be lower still. Rather than create unnecessary work for bureaucrats and additional red tape for retailers, the new government should simply cut the federal levy to 8.5 cents and be done with it.

Although supply and demand will ultimately set the price at the pump, Ottawa can make the pain a little less intense. If motorists are incensed, they should ask what the new prime minister is going to do to help them.

Tanis Fiss & John Williamson, Canadian Taxpayers Federation