Pain at the Ottawa Gas Pumps

As Canadians brace for a summer of pain at the pumps, Prime Minister Stephen Harper has made it clear he has NO plans to offer relief from soaring fuel prices.

Mr. Harper told: "I think that the truth of the matter is that higher gas prices - that's going to be something that we're going to have to get used to,".

Aside from a planned reduction of the GST, which will provide only minimal relief from gas prices that have soared above $1 a litre, Mr. Harper is turning a blind eye to the impact higher fuel prices will have on the Canadian economy.

And it's a stance that is curiously different from what Mr. Harper and the Conservatives said in Opposition.

Consider these positions put forth by Mr. Harper prior to his party's election on January 23, 2006:

• May 2004 - Mr. Harper said he wouldn't apply the GST to the portion of gas prices that exceeds 85 cents a litre. A Conservative government would also eliminate the tax-on-tax that drives many motorists crazy, he said. The federal excise tax currently rolled into pre-GST fuel prices would be made GST-exempt.
• August 2005 - Mr. Harper said Ottawa could easily reduce the price of gasoline by two to five cents a litre. He renewed his call for the federal government to stop double-taxing gasoline through the GST. Mr. Harper said Ottawa could also reduce its surtax on gasoline, introduced in the mid-1990s, as a deficit-fighting measure.
• September 2005 - Mr. Harper reminded the government that taxes make up an average of 37 per cent of the price for a litre of gas in Canada. In the U.S., tax accounts for just 18 per cent of the price of gasoline. "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 demanded.

Now in power, it appears Mr. Harper's cries from the Opposition benches were nothing more than empty rhetoric.

This reality is especially troubling considering it comes from a party that promised to bring integrity and accountability back to Parliament Hill.

Inflated gas taxes were first introduced in the 1970s as a means to curb consumption. However, despite best intentions, Canadians continue to be among the world's top consumers of gasoline, with sales increasing on average one per cent per year.

According to the Canadian Taxpayers' Federation, the federal government collected $4.25 billion in direct federal gasoline taxes in 2004, an 18 per cent increase over what was collected 10 years earlier. One explanation for the increase is the steady increase in gasoline tax rates. The federal gasoline tax rate increased 567 per cent 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 seven per cent GST 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.

With Mr. Harper now in power, taxpayers await the 2006 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 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.

However, it seems Mr. Harper and the Conservatives are just as addicted to gas tax revenues as their Liberal predecessors.

PS:

Update on the Speech from the Throne and the Accountability Act:
On April 3rd, Canada’s New Government presented an agenda for change in its Speech from the Throne; a focused plan with Five Priorities that will bring accountability back to Ottawa, deliver real results to ordinary working people and their families and make Canada stronger.

Irving R. Gerstein, the Chair of Conservative Fund Canada e-mailed you at that time to ask for your help in mobilizing Canadians in support of this agenda and the five priorities of our new Conservative government.

Thanks to thousands of Conservative supporters we are making our voices heard. Canadians support our plan. And they most definitely support our Prime Minister. However, the same cannot be said for the opposition Liberals. They’re picking away at the Federal Accountability Act and threatening to vote against our upcoming budget which will cut the GST and provide choice in child care.

The Liberals do not want Canada’s New Government to succeed because we are cleaning up the mess they left behind. They don’t want Canadians to see a real leader at work. They don’t want Canadians to know that politics can be done differently in Canada.

All the Liberals need to do to defeat our budget – and Government – is convince one of the other opposition parties to support them. This will give the Liberals the numbers they need to block change and turn back the clock.

We cannot let that happen. We’ve come too far to let petty partisanship win the day.

Your past and continued support for our Party is both appreciated and is vital to our success.

Sincerely,

Michael D. Donison
Executive Director
Conservative Party of Canada