May 2005 Archives

Gas Tax Honesty Campaign

CTF Launches 7th Annual Gas Tax Honesty Campaign

- New report shows Ottawa spends only 7.2% of gas taxes on roads.

- CTF critical of federal government’s plans to exclude roadway spending in gas tax transfer.

- CTF repeats call for federal government to dedicate 50% of gas taxes to roadway development and for a gas tax cut of 5 cents/litre.

Ottawa: The Canadian Taxpayers Federation (CTF) today launched its 7th annual Gas Tax Honesty Campaign, marking Gas Tax Honesty Day. The yearly campaign kicks off the summer travel season for Canadian motorists.

The CTF began its Gas Tax Honesty Campaign in 1999 to inform Canadians of the gasoline taxes they pay at the pumps (see gas facts, below, for updated figures), to ensure gasoline taxes are dedicated toward roads, and to pressure Ottawa to cut gasoline taxes not spent on road construction. In 2002, the CTF proposed a Municipal Roadway Trust – a practical model for returning half of the federal gas tax revenues directly to municipalities to spend on roads and highway development and maintenance. The 2005 gas tax report is available at http://www.taxpayer.com/pdf/Gas_Tax_Honesty_Campaign_2005.pdf.

In addition to implementing a MRT-style model, the CTF is calling on Ottawa to eliminate the 1.5 cent/litre deficit elimination tax as a first step; stop taxing taxes by removing the GST (and HST where applicable) charged on federal and provincial gas taxes; and reduce the federal levy by 2 cents. These three measures would reduce the gas tax bite by 5 cents a litre. To date, the CTF has collected more than 115,000 signatures in favour of its MRT and gas tax cut initiative.

This year's gas tax report examines the federal-provincial gas tax transfer deals in place between Ottawa and British Columbia and its municipalities, and between Ottawa and Alberta.

"Sharing gas taxes with municipalities should be commended, yet these agreements miss the mark. The construction and maintenance of roads, highways and bridges are ranked as a secondary priority in terms of funding" said federal director John Williamson. "These agreements fail to acknowledge the burden municipalities face with road construction and maintenance or the importance of using gas taxes to mend roads. It will not be local municipal leaders but federal bureaucrats armed with terrain maps and funding formulas who will determine local funding priorities. Road upkeep is still not a priority for Ottawa."

Canadian Gas Facts:

Of the $4.5-billion collected in federal gasoline and diesel taxes in 2004-2005, Ottawa returned a paltry 7.2% or $324-million back in provincial transfers for road and highway development. In addition, Ottawa collected $1.198-billion in gasoline GST revenues.

Over the past 12 months – the period of May 2004 to April 2005 – the average cost of a litre of gasoline paid by Canadian motorists was approximately 84 cents. This represents a 10-cent increase over last year’s average price. Taxes account for an average 38% of the pump price. Gasoline prices have now jumped to a weekly average price of approximately 90 cents per litre, and have regularly surpassed $1 per litre in parts of the country.

GST is charged on the full pump price, gasoline taxes included. It is a tax on tax. As the pump price increases so too does the GST. Last year, the federal government collected $1.198-billion in gasoline GST revenues. For every 10 cent increase in the price of gasoline, Ottawa’s GST revenues rise by $175-million.

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 seven years ago, but the tax remains and the federal government’s gouging at the pumps continues even with multi-year, multi-billion dollar federal surpluses.

The federal government's priorities are not road maintenance or construction. Minister of State for Infrastructure and Communities John Godfrey stated in the House of Commons on May 19th, 2005, that "the purpose of the gas tax is to invest in environmentally sustainable municipal infrastructure … It could be public transit, waste, wastewater, waste management or community energy systems." Subsequently, he added, "We wanted to direct the bulk of [gas tax] money toward public transit and water projects so that when we had made our investments, we would be able to reduce greenhouse gas emissions and clean up water and air." In February, 2005, the infrastructure minister had stated gas tax revenues could be directed toward roads and bridges.

In 2003, Canadian municipalities spent $6.4-billion building and maintaining roads. More than eighty per cent of all roads in Canada are municipal roads.

John Williamson
Canadian Taxpayers Federation
www.taxpayer.com

New funding program for charities

The Minister of National Revenue has launched the Charities Partnership and Outreach Program, a funding program designed to support education and training projects for charities. The program has been created to raise awareness of regulatory obligations of charities under the Income Tax Act, improve the development and delivery of compliance-based education programs by the voluntary sector, and to increase regulatory compliance. Up to $3 million in funds will be available to the voluntary sector annually for education and training on charities regulation.

For more information, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/releases/2005/may/0517charities-e.html

Ontario Budget 2005

Yesterday the McGuinty Liberal government unveiled its second budget. The Budget contains no new taxes but delays balancing the provincial budget to 2008-09 although the deficit may be eliminated a year earlier if the reserve is not required. Highlights of the Ontario Budget 2005 include:

- $6.2 billion more will be spent on postsecondary education and training between now and 2009-10 including:

-- increased financial aid for low- and middle-income students;
-- increasing the number of college and university students enrolled in postsecondary education;
-- expanding new first-year medical education spaces by 15 per cent; and
-- increasing the number of new apprentices to 26,000 annually by 2007-08.

- more doctors and nurses, reducing wait times and keeping people healthy

- strengthening Ontario's economy through critical investments in infrastructure and innovation, including a five-year, $30 billion infrastructure plan for roads, transit, hospitals, schools, colleges and universities, more affordable housing and a proposed Research Council of Ontario.

More information on the Ontario budget can be found at the Ontario Budget 2005 Home

You're late filing: So now what?

If you didn't know it, the filing deadline for your 2004 personal income tax return has come and gone. Tax returns received by CRA or postmarked after midnight May 2 are considered late.

So what happens when you're late? Late-filing penalties and interest on amounts owing. And each day you wait it only gets worse.

Just because you've procrastinated this long doesn't mean you should delay it any longer. For your 2004 return, CRA charges compound daily interest starting May 1, 2005, on any unpaid amounts owing, including any balance owing if they reassess your tax return. Furthermore, you will be charged interest on any penalties starting the day after your return is due. (The rate of interest changes every three months. See CRA's prescribed interest rates.)

What if you have a good excuse for not filing? You may be in luck. CRA may cancel and waive penalities and interest on unpaid taxes under certain circumstances. For more information about these extenuating circumstances, refer to CRA's fairness provisions.

For more information about late-filing penalties and interest rates, see the CRA web site at:
http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/interest/menu-e.html