Friday, September 02, 2005 - Editorial - About that gas tax ...

Sometimes it's just plain sickening to watch how the oil and gas industry works. It will be weeks or months before the full devastation of Hurricane Katrina is felt and oil production in the ruined Gulf of Mexico area can begin to get back on track.

But the resulting gas price hike? It happened instantly, hitting us here in Canada faster than Katrina did -- and harder. This, even though the gas being sold was refined and distributed long before Katrina developed.

True, in light of the horrendous human misery in New Orleans and throughout southern Louisiana, Mississippi and Alabama, gas prices may seem a small matter, and griping about them rather unseemly.

No more unseemly, however, than the fact that the tragedy of Katrina has been a bonanza for gas companies -- and government coffers.

There's little we can do about the market forces now driving the price of oil. But the sudden windfall in taxes -- particularly for Ottawa -- is another story.

As Canadian Taxpayers Federation federal director John Williamson noted this week, one-third of the price of a litre of gas is taxes -- and the GST is charged on top of all the other taxes, meaning a sudden spike like this is highly profitable for the feds.

The CTF has repeatedly called on Ottawa to reduce fuel taxes three ways:

1. End the GST tax-on-tax -- a savings to the consumer of, on average, 1.5 cent/litre.

2. Scrap the dishonest "deficit elimination" tax (the government hasn't had a deficit in eight years, so why are we still paying this?), for another 1.5-cent reduction.

3. Cut the federal gas tax itself by 2 cents, bringing the total price reduction to 5 cents/litre.

Cynics argue, of course, that a nickel per litre either way won't make much difference. Finance Minister Ralph Goodale himself has refused to cut gas taxes, suggesting gas companies would just hike their prices accordingly anyway (which they deny). Meanwhile, the feds now portray their gas gouging as noble, saying big cities need their new gas tax transfer (only a fraction of the billions raised).

Nonsense. The CTF is right on this. It's blatant overtaxation, and the feds' excuses don't wash anymore. Our roads and infrastructure may be crumbling, but the feds are rolling in gas tax revenues -- up 18% over a decade ago. Small wonder they have no intention of helping consumers fight high gas prices.

Talk about sickening.

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