Gas Tax Archives

Canada Day Brickbats & Laurels

While Canadians celebrated Canada Day on July 1, it was business as usual for government. Taxes were paid, regulations enforced and lawmakers handed out awards. Indeed, the holiday was an unusually active one on public policy issues of concern to the Canadian Taxpayers Federation, which is dedicated to lower taxes, less wasteful spending and government that is accountable to voters.

On Taxes – Brickbat to Higher Energy Taxes

British Columbia taxpayers are paying more for gasoline and most other energy sources as a result of Liberal Premier Gordon Campbell’s introduction of a carbon tax. The levy went into effect on July 1 and gasoline taxes increased by 2.34 cents a litre (the additional tax paid by consumers is actually 2.46 cents/L when the GST tax-on-tax is factored in). Vancouver, which today has the highest taxes on gasoline, saw pump prices jump to over $1.50. The province’s carbon tax will also hit natural gas, propane, diesel and jet fuel. It will rise again on Canada Day over the next four years unless high energy prices and voter furry prompts Premier Campbell to rethink his policy.

Canada’s Official Opposition also wants to saddle consumers with a federal carbon tax if they win the next federal election. Liberal Leader Stéphane Dion’s plan will not add a new tax to pump prices because, the opposition rightly says, gasoline is already heavily taxed by Ottawa. Instead, the Liberal proposal will see taxes on other energy sources – like home heating fuel – rise to the level of taxes applied to gasoline.

On Spending – Laurel to the Department of Indian Affairs

July 1 also saw the introduction of a reform to bring badly-needed accountability to Canada’s native reserves. Indian Affairs Minister Chuck Strahl’s hard-fought proposal to amend departmental funding agreements to include an audit clause went into effect. This change gives Ottawa powers to review how native bands spend tax dollars and is something taxpayers – native and non-native alike – have repeatedly demanded. Ottawa believes adding any audit mechanism will ensure tax dollars are actually spent “for the provision of intended programs and services and that [native reserves] have appropriate management, financial, and administrative controls in place.” Translation: that federal money is spent responsibly and bands account for it. This small, but necessary, spending reform brings the Indian affairs department in line with virtually every other federal department, including health, heritage and the RCMP. It is a long-overdue reform given that every year $10-billion is transferred to native bands across Canada.

On Accountable Government – Brickbats to the Government of Canada & Rideau Hall

Prime Minister Stephen Harper quickly distanced his government from Rideau Hall’s award of the Order of Canada to Dr. Henry Morgentaler this week. Whereas the Governor-General routinely takes advice from elected officials on other matters, Order of Canada appointments are made by an advisory committee without ministerial input. If Canadians are hoping their Prime Minister might have a say on appointments they must look across the pond, to Britain.

Former Prime Minister Jean Chrétien advised the Queen not to grant a life peerage to Conrad Black after the British government recommended him for this honour. Similarly, Canadian Roy Thomson’s peerage was blocked by Lester Pearson. (Both men forfeited their Canadian citizenship to bypass Ottawa’s ruling.) The British honour system includes an advisory committee, but unlike Canada also permits input from the Prime Minister’s office. Canada’s Prime Minister can therefore advise (approve or block) our Queen on the granting of honours to Canadians from London, but he has no influence on honours originating in Ottawa. Only in Canada, you say? Pity, but not surprising.

END

Please note that after six good years with the Canadian Taxpayers Federation, I will be resigning as federal director on Sept. 12, 2008, to undertake graduate studies in economics.

John Williamson
Federal Director
Canadian Taxpayers Federation

Canada’s 10th Annual Gas Tax Honesty Day

· Taxpayers Federation repeats call for lower and dedicated gas taxes – eliminate the “deficit elimination” tax and stop taxing the tax.

· Motorists beware – B.C. pump prices will increase by 2.41¢ on July 1 and 7.23¢ in 2012 as a result of province’s new carbon tax.

· Gas prices will rise nationally if Canada adopts carbon tax.

HALIFAX / FREDERICTON: The Canadian Taxpayers Federation (CTF) today launched its 10th annual Gas Tax Honesty Campaign, marking Gas Tax Honesty Day. The yearly campaign kicks off the summer travel season for Canadian motorists. It is also the day of the year that taxpaying motorists are reminded of the high tax component hidden in the price of gasoline – a tax burden that will only increase if the federal government and provinces adopt a carbon tax on fossil fuels.

Over the past 12 months – the period of May 2007 to April 2008 – the average national price of a litre of gasoline paid by Canadian motorists was approximately $1.16. This represents a 17-cent increase over last year’s average price. Today, gasoline taxes account for an average 28% of the pump price.

CTF directors held press conferences at nine gas stations across the country to talk about government tax gouging. Afterwards, a handful of customers were refunded the tax component of their pump purchase to highlight the heavy tax load on gasoline. If proponents of a carbon tax are successful Canadians will pay more for gas and diesel (as well as natural gas, propane and home heating fuel).

“Ottawa will collect approximately $5-billion in direct gasoline and diesel taxes this year. Another $1-billion will come from the GST,” said federal director John Williamson. “The good news is Ottawa will spend $1.95-billion or 37% of its gas and diesel tax revenue on roads and highway infrastructure this year. The amount will increase to 52% next year when roadway spending is scheduled to hit $2.7-billion. This level of spending exceeds the 50% target first advocated by the CTF in 2002. Four years ago the federal government spent only 7% of gas tax revenues on roads making this an impressive turnabout. This is a partial victory for motorists. To complete it, gas taxes need to be lower.”

Williamson continued, “The bad news is some are calling for new taxes on most sources of energy, including gasoline. Consumers should be under no illusion, enacting a carbon tax will mean higher energy prices and a tax increase on the middle class. As a result of B.C.’s carbon tax, gas prices in the province will increase by 2.41¢ on Canada Day and by 7.23¢ in 2012. It will impact family budgets.”

The CTF is calling on Ottawa to cut, rather than raise gas taxes by eliminating the 1.5 cent/litre “deficit elimination tax” as a first step (see details, next page); stop taxing taxes by removing the GST (and HST where applicable) charged on federal and provincial gas levies; and reducing the federal levy an additional 2.5 cents. These three measures would reduce the gas tax bite by 5 cents a litre and are, in part, consistent with what Stephen Harper promised in Opposition.

To date, the CTF has delivered more than 150,000 petitions to Parliament Hill demanding lower and dedicated gas taxes. The CTF began its Gas Tax Honesty Campaign in 1999 to inform Canadians of the gasoline taxes they pay at the pumps, to ensure gasoline taxes are dedicated toward roads, and to pressure Ottawa to cut gasoline taxes not spent on road construction. The 2008 report is available at:
http://www.taxpayer.com/pdf/GTHD-2008.pdf

Additional Canadian Gas Tax Facts:

The federal government collects billions of dollars each year from gas and diesel excise taxes. In the 2007-08 fiscal year, Ottawa collected $5-billion in gasoline and diesel taxes (not counting GST revenues). In fiscal 2004, Ottawa reinvested only 7 per cent of its gas tax revenues in roads and highway development. In 2007-08, the federal government dedicated $1.8-billion to roads and highways. This represents 36 per cent of annual gas tax revenues. The same amount – 37 per cent – will be spent this year. By 2009-10, over $2.6-billion is scheduled to be spent on road infrastructure, which exceeds the 50 per cent of gas tax revenue target first advocated by the Canadian Taxpayers Federation in 2002. This turnabout is a partial victory for taxpaying motorists. To complete it, gas taxes need to be lower.

GST is charged on the full pump price, gasoline taxes included. It is a tax-on-tax. In 2008-09, the federal government will collect $1.1-billion in gasoline GST revenues. Last year, Ottawa collected $1.25-billion from GST on gasoline. (The tax bite was eased to some extent as a result of the second point GST reduction.)

The federal government benefits from higher gas prices. As the pump price increases so too does the GST. For every 10 cent increase in the price of gasoline, Ottawa’s GST revenues rise by $100-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 a decade ago, but the tax remains and the federal government’s gouging at the pumps continues even with multi-year, multi-billion dollar federal surpluses. Since the budget was balanced in fiscal 1997-98, Ottawa has collected $6-billion from its so-called “deficit elimination tax.” All said, the federal gasoline tax increased by 567 per cent between 1985 and 1995 – rising from 1.5 to 10 cents per litre.

In opposition, the Conservatives made repeated promises to remove the GST tax-on-tax bite and pledged to remove the GST completely when gasoline prices exceeded 85 cents per litre. In the summer of 2005, Mr. Harper was quoted saying that gas taxes could be reduced by as much as 5 cents a litre.

Three Conservative budgets have failed to lower gas taxes although roadway spending is substantially increased.

John Williamson
Federal Director
Canadian Taxpayers Federation

It's Gas Tax Honesty Day! 1/3 of pump price is tax

CTF welcomes new data showing federal roadway spending is up.

Taxpayers Federation repeats call for gas tax cut of 5 cents/litre.

Conservative Government silent on gas tax relief promises.

Ottawa: The Canadian Taxpayers Federation (CTF) today launched its 9th annual Gas Tax Honesty Campaign, marking Gas Tax Honesty Day. The yearly campaign kicks off the summer travel season for Canadian motorists. It is also the day of the year that Canadian motorists are reminded of the high tax component hidden in the price of gasoline.

CTF directors held press conferences at six gas stations across the country this morning to talk about government tax gouging. Afterwards, a handful of customers were refunded the tax component of their pump purchase by the CTF as a way to highlight the heavy tax load on gasoline.

Over the past 12 months – the period of May 2006 to April 2007 – the average cost of a litre of gasoline paid by Canadian motorists was approximately 99.2 cents. Gasoline taxes account for an average 33% of the pump price. In the past two years, the average national price of gasoline has increased by over 14 cents.

"Ottawa will collect approximately $5.2-billion in direct gasoline and diesel taxes this year. Another $1.5-billion will come from the GST,” said federal director John Williamson. “The good news is Ottawa will spend $1.8-billion or 36% of its gas and diesel tax revenue on roads and highway infrastructure this year. The amount will increase to over 52% within 2 years when roadway spending is expected to top $2.6-billion. This level of spending exceeds the 50% target first advocated by the CTF in 2002. Three years ago the federal government spent only 7% of direct gas tax revenues on roads making the boost an impressive turnabout. This is a partial victory for motorists and to complete it, gas taxes need to be lower.”

The CTF is calling on Ottawa to eliminate the 1.5 cent/litre “deficit elimination tax” as a first step (see details, below); stop taxing taxes by removing the GST (and HST where applicable) charged on federal and provincial gas taxes; and reduce the federal levy an additional 2 cents. These three measures would reduce the gas tax bite by 5 cents a litre and are, in part, consistent with what Stephen Harper promised in Opposition. To date, the CTF has delivered more than 150,000 petitions to Parliament Hill demanding lower and dedicated gas taxes.

The CTF began its Gas Tax Honesty Campaign in 1999 to inform Canadians of the gasoline taxes they pay at the pumps, 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 federal gas tax revenues directly to municipalities to spend on roads and highway development and maintenance. The 2007 report is available at: http://www.taxpayer.com/pdf/Gas_Tax_2007.pdf

Canadian Gas Facts:

Over the past 12 months – the period of May 2006 to April 2007 – the average cost of a litre of gasoline paid by Canadian motorists was approximately 99.2 cents. Gasoline taxes account for an average 33 per cent of the pump price. In the past two years, the average national price of gasoline has increased by over 14 cents.

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.

The federal government collects billions of dollars each year from gas and diesel excise taxes. In the 2006-07 fiscal year, Ottawa collected $5.2-billion in gasoline and diesel taxes (not counting GST revenues). In fiscal 2004, Ottawa reinvested only 7 per cent of its gas tax revenues in roads and highway development. In 2007-08, the federal government will dedicate $1.8-billion to roads and highways. This represents 36 per cent of annual gas tax revenues. By 2009-10, over $2.6-billion will be spent on road infrastructure, which exceeds the 50 per cent of gas tax revenue target first advocated by the Canadian Taxpayers Federation in 2002. This turnabout is a partial victory for taxpaying motorists. To complete it, gas taxes need to be lower.

GST is charged on the full pump price, gasoline taxes included. It is a tax-on-tax. In 2007-08, the federal government will collect $1.5-billion in gasoline GST revenues. Last year, Ottawa collected nearly $1.8-billion from GST on gasoline. (The tax bite was eased to some extent as a result of the one point GST reduction.)

The federal government benefits from higher gas prices. As the pump price increases so too does the GST. For every 10 cent increase in the price of gasoline, OttawaR17;s GST revenues rise by $150-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 a decade ago, but the tax remains and the federal government’s gouging at the pumps continues even with multi-year, multi-billion dollar federal surpluses. All said, the federal gasoline tax increased by 567 per cent between 1985 and 1995 – rising from 1.5 to 10 cents per litre.

In opposition, the Conservatives made repeated promises to remove the GST tax-on-tax bite and pledged to remove the GST completely when gasoline prices exceeded 85 cents per litre. In the summer of 2005, Mr. Harper was quoted saying that gas taxes could be reduced by as much as 5 cents a litre.

The 2006 and 2007 Conservative budgets failed to lower gas taxes although roadway spending is substantially increased.

John Williamson
Federal Director
Canadian Taxpayers Federation

CTF Launches 8th Annual Gas Tax Honesty Campaign

New budget data shows federal government’s roadway spending is up.

Taxpayers Federation repeats call for Ottawa to dedicate 50% of gas taxes to roadway development and for gas tax cut of 5 cents/litre.

Harper Government in full retreat from gas tax relief promises.

Ottawa: The Canadian Taxpayers Federation (CTF) today launched its 8th 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 federal gas tax revenues directly to municipalities to spend on roads and highway development and maintenance. The 2006 report is available at www.taxpayer.com.

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 an additional 2 cents. These three measures would reduce the gas tax bite by 5 cents a litre. To date, the CTF has delivered more than 150,000 petitions to Parliament Hill demanding lower and dedicated gas taxes. (On October 5, 2005, then-Opposition leader Stephen Harper accepted 35,000 of these petitions.)

This year’s gas tax report – entitled Gas Taxes: Promises Made, Promises Unkept – highlights past problems with Ottawa’s gas tax sharing schemes, notes the continued gouging of consumers as gasoline prices soar, and details the Harper government’s election promises.

“Past gas tax transfer deals miss the mark by making the construction and maintenance of roads, highways and bridges a secondary priority,” said federal director John Williamson. “The government should be commended for dedicating a greater percentage of gas tax revenues to roadway spending. Now they need to make good on their election promise to renegotiate the so-called New Deal with cities so that roadways are made a priority, and gas tax dollars are spent on road construction and maintenance.”

On gas taxes the Conservative government is in full retreat from commitments repeatedly made in opposition. “Stephen Harper vowed to reduce the gas tax bite, and we believe a promise made in opposition should be a promise kept in government,” continued Williamson. “As record-high gas prices pump unanticipated millions of dollars into federal coffers, it is time to give some of that money back to taxpaying motorists who are running on empty.”

Canadian Gas Facts –

Over the past 12 months – the period of May 2005 to April 2006 – the average cost of a litre of gasoline paid by Canadian motorists was approximately 96 cents. This represents a 12-cent increase over last year’s average price. Taxes account for an average 35% of the pump price. Gasoline prices have now jumped to a weekly average price of over $1 per litre in every region of the country.

Of the $5.2-billion collected in federal gasoline and diesel taxes in 2005/06, Ottawa will spend 17% or $882-million on actual road and highway construction and maintenance.

In addition, 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. Two years ago, the federal government collected $1.4-billion in gasoline GST revenues. For every 10 cent increase in the price of gasoline, Ottawa’s GST revenues rise by $175-million. Due to soaring gas prices, Ottawa will collect $1.8-billion in GST from gasoline in 2005/06, up $400-million over the previous year.

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 federal surpluses.

Despite a greater investment in roadway construction and maintenance, the new government is in full retreat from commitments to reduce gas taxes. On August 18, 2005, then-Opposition Leader Stephen Harper blasted the Liberal government for refusing to reduce gas taxes as prices soared. “There’s no reason for the federal government to profiteer when consumers are hurting,” he said urging the previous Liberal government to give motorists a break. “This is causing considerable dislocation. There are a lot of people on fixed incomes. There are a lot of businesses on thin margins that are going to be affected by this.”

In opposition, the Conservatives made repeated promises to remove the GST tax-on-tax bite and pledged to remove the GST completely when gasoline prices exceeded 85 cents per litre.

The Conservative platform committed the government to expand the New Deal to allow all cities and communities – including cities with more than 500,000 people – to use gas tax transfer dollars to build and repair roads and bridges to improve road safety and fight traffic congestion.

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
Federal Director
Canadian Taxpayers Federation

Pain at the Pumps: Call Stephen Harper

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

John Williamson
Federal Director
Canadian Taxpayers Federation

Turning Taxpayer Anger into Voter Anger

To date, 150,000 gas tax petitions delivered to Parliament Hill

CTF pegs the cost paid by Canadian motorists of the GST tax-on-tax bite and the “deficit elimination” tax at $9.5-billion

Ottawa: The Canadian Taxpayers Federation (CTF) continues to speak out on the issue of high gasoline taxes. Today on Parliament Hill, federal director John Williamson unveiled 35,000 gas tax petitions calling on the federal government to cut gas taxes by 5 cents a litre. Last October, the CTF delivered 65,000 petitions to John Godfrey, Minister of State (Infrastructure and Communities). Another 50,000 gas tax petitions were presented to Paul Martin, then-Minister of Finance, in 2000.

“Because the prime minister and his finance minister say they will not cut the gas tax, the Canadian Taxpayers Federation opted to deliver the gas tax petitions to the Conservative Opposition,” stated Mr. Williamson. “We want to turn taxpayer anger over gas prices into voter anger at Ottawa’s gas tax gouging. The Liberals are not listening to the cries from Canadians to tax them fairly at the pumps.”

Calculating the cost of the “deficit elimination” tax (since 1998) and the GST tax-on-tax (since 1991):

“Since the budget was balanced in early 1998, the federal government has collected $4.7-billion from its 1.5 cent per litre ‘deficit elimination’ tax. This is an offensive tax that should have been repealed when the books were in surplus,” said Williamson. “In addition, since the GST was brought in the tax-on-tax scheme has cost taxpaying motorists another $4.8-billion. These two illegitimate tax measures have cost Canadians taxpayers $9.5-billion.”

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 deficit reduction tax remains.

The GST and HST (paid in New Brunswick, Nova Scotia and Newfoundland & Labrador) are charged on the full pump price, gasoline taxes included. The tax is levied on Ottawa’s 10 cent per litre fuel excise tax as well as provincial taxes, which range from a low of 9 cents/litre to a high of 20.5 cents/litre. And as pump prices climb, Ottawa rakes in even more GST revenues. At current price levels, the federal treasury will collect at least another $300-million over the fiscal year.

“Approximately one third of the price of a litre of fuel in Canada is taxes. Taxpayers want action in the form of lower taxes on fuel, not more excuses from the government why gas taxes cannot be reduced,” concluded Mr. Williamson. “It is time Ottawa ended its gas gouging. This can be accomplished with three easy steps. Ottawa should end its GST tax-on-tax bite. This will lower the price, on average, by 1.5 cents a litre. It should 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 5 cents a litre. Theses modest measures will return $2-billion to taxpayers each year.”

John Williamson
Canadian Taxpayers Federation

Canadian Taxpayers Federation to Deliver Gas Tax Petitions to Opposition Leader

REVISION – Ottawa: The Canadian Taxpayers Federation (CTF) will hold a photo opportunity with Opposition leader Stephen Harper today at 1pm outside of the Peace Tower on Parliament Hill.

The CTF will present 35,000 gasoline tax petitions calling on the federal government to cut gas taxes. This brings the total petitions delivered to date to 150,000. Last October, the CTF delivered 65,000 petitions to John Godfrey, Minister of State (Infrastructure and Communities). Another 50,000 gas tax petitions were presented to Paul Martin, then-Minister of Finance, in 2000.

Following this event – at approximately 1:15pm – CTF federal director John Williamson will hold a news conference in the Charles Lynch press room (130-S) in the House of Commons.

The CTF is Canada’s largest taxpayer research and advocacy organization with over 72,000 supporters. Established in 1990, it is a federally incorporated not-for-profit, non-partisan, organization. The CTF is dedicated to lower taxes, less waste, and more accountable government.

John Williamson
Canadian Taxpayers Federation

What’s Behind High Gas Prices?

The Canadian Centre for Policy Alternatives has released What’s Behind High Gas Prices?, a short analysis of the current gas price spike by economist and CCPA Research Associate Hugh Mackenzie that sparked numerous news stories across the country.

The news release for the report appears below. The report can be downloaded from the CCPA web site:

http://www.policyalternatives.ca/Reports/2005/09/ReportsStudies1193/index.cfm?pa=BB736455

High gas prices unjustified—report

OTTAWA—The recent spike in gas prices constitutes nothing short of price-gouging on the part of the oil industry.

According to an analysis by economist Hugh Mackenzie released today by the Canadian Centre for Policy Alternatives, the Canadian oil industry has been taking advantage of public fear prompted by the devastating hurricanes in the United States and charging more than was justified by the increase in raw material costs.

Mackenzie looks at what’s behind the current high gas prices and finds that taxes have virtually nothing to do with the increased price in gas because, with the exception of the GST, all provincial and federal gasoline taxes are flat amounts per litre and don’t go up when crude prices go up.

While the price of crude oil has gone up, Mackenzie’s calculations find a 7-9¢ per-litre increase would have matched the crude oil price increase. “The 15¢ increase we’re now paying is profiteering,” he says. “And the 40¢ increase we were paying over the Labour Day weekend was just plain gouging.”

According to Mackenzie a reasonable price for gas in Ontario would be 95¢ per litre, about 10¢ less than the current price. A 10¢ per litre difference may not sound like much but every penny per litre generates an additional $1.1 million for the industry every day.

“For the period around Labour Day, when the difference between the price and what would have been justified by crude oil prices was much greater — as much as 45¢ per litre at the peak — the industry was bringing in $49.5 million in excess profits a day,” Mackenzie concludes.

No More Excuses – As Gas Prices Soar...

No More Excuses – As Gas Prices Soar it is Time Ottawa Ended its Tax Gouging at the Pumps

St. Andrews (New Brunswick): The Canadian Taxpayers Federation (CTF) continues to speak out on the issue of high gasoline taxes. Overnight the prices of gas jumped to $1.31 a litre in Ottawa, $1.20 in Toronto, $1.15 in Montreal and $1.13 in Vancouver. The price hikes come amid reports of extensive damage to oil platforms in the Gulf of Mexico caused by hurricane Katrina. The CTF has led the charge in blowing the whistle on tax gouging at the pumps, and is again calling on the federal government to act by lowering fuel taxes.

“Approximately one third of the price of a litre of fuel in Canada is taxes. Taxpayers want action in the form of lower taxes on fuel, not more excuses from federal politicians why gas taxes cannot be reduced,” stated CTF federal director John Williamson. “It is time Ottawa ended 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 5 cents a litre.”

In fiscal 2004-2005, the federal government collected $4.5-billion in combined federal gasoline and diesel taxes (not including GST revenue), 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.

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 deficit reduction tax remains and the federal government’s gouging at the pumps continues even with multi-year, multi-billion dollar surpluses.

Another contributor to growing federal gasoline tax revenues is the GST and HST (paid in New Brunswick, Nova Scotia and Newfoundland & Labrador). The GST and HST are charged on the full pump price, gasoline taxes included. The tax is levied on Ottawa’s 10 cent per litre fuel excise tax as well as provincial taxes, which range from a low of 9 cents/litre to a high of 20.5 cents/litre. As pump prices climb, Ottawa rakes in even more GST revenues. Between 1996-1997 and 2004-2005, GST revenues from gasoline sales increased from $909-million to $1.2-billion – a 31 per cent increase. At current price levels, the federal treasury will collect at least another $300-million over the next year — bringing total GST revenues from gas to over $1.5-billion.

John Williamson
Canadian Taxpayers Federation

Debunking the Prime Minister’s Gas Tax Spin

Paul Martin dug in his heels this week and ruled out lowering gasoline taxes. Canadians will continue to pay through the nose for gas thanks to high oil prices and fuel taxes, which account for one third of the pump price. Prices now average more than one dollar per litre – meaning 33 cents is tax – and family budgets are being squeezed. Yet according to the Prime Minister the price hike does not mean more tax revenue for Ottawa because with higher prices consumption falls.

“The federal government does not make money from increasing gas prices,” he told reporters Monday with a straight face. 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.

As for the suggestion that gas consumption falls with price spikes, Mr. Martin knows better. According to Statistics Canada, gasoline sales increase at an average rate of just over one per cent 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 or disposable income to purchase other goods and services.

Mr. Martin’s other line of defence against reducing taxes 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 – 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. (See data chart.) 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 year 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 cannot reduce gas taxes.

But then, the federal government seems generally unconcerned about the welfare of the average taxpayer. How can Liberal MPs, for example, defend charging motorists the 1.5 cent a litre “deficit elimination” gas tax when the deficit vanished seven long years ago? Why do they continue to charge taxpayers for something – i.e. the deficit – that does not exist? 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 per cent 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. Even with such a modest gas tax reduction the federal government will still collect billions of dollars in fuel tax revenues each year.

Mr. Martin, you have no more excuses.

John Williamson
Canadian Taxpayers Federation

Painful Gas Taxes

Blame Government for Pain at the Pumps

Ever feel like placing a 9-1-1 call to report a robbery whenever you pull up to the pumps? Gasoline prices have now jumped to a weekly average price of over 90 cents per litre, and have regularly surpassed $1 per litre in many 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 per cent of the pump price. On average, taxes account for about 38 per cent of the pump price.

Alberta has one of the lowest provincial gas tax rates at 9 cents per litre. Vancouver’s provincial/municipal gas tax is a whopping 20.5 cents a litre. Quebec’s provincial levy is 15.2 cents/litre, plus motorists pay a 7.5 per cent sales tax on gas, and Montreal drivers are whacked with an additional 1.5 cent tax on each litre of gas they buy. Down east, Atlantic Canadians are hit mighty hard by the 15 per cent Harmonized Sales Tax (HST) at the pumps.

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 fiscal 2004-2005, 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.

Another contributor to growing federal gasoline tax revenues is the GST and HST (paid in New Brunswick, Nova Scotia and Newfoundland & Labrador). The GST and HST are charged on the full pump price, gasoline taxes included. It is a tax levied on the other gas taxes. And as pump prices climb, Ottawa rakes in even more GST revenues. Between 1996-1997 and 2004-2005, GST revenues from gasoline sales increased from $909-million to $1.2-billion – a 31 per cent increase! At current price levels, the federal treasury will likely pump another $175-million over the next year — bringing total GST revenues from gas to over $1.35-billion.

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.

Canadians unhappy about gas prices should blame the government – particularly the rascals in Ottawa – because they have the ability to lower taxes. With crude prices and consumption predicted to climb, it is time the federal government give motorists a break at the pump.

John Williamson
Canadian Taxpayers Federation

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