| The Province |
Monday, June 30, 2008
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Soaring prices at the pump add up to a tax bonanza worth hundreds of millions of dollars to the federal government, says the Canadian Taxpayers Federation.
Ottawa takes in $100 million in additional GST for every 10-cent rise in the price of a litre of gas, says Maureen Bader, the federation's B.C. director.
"High gas prices are good for the federal treasury," she says.
The GST is only one of the taxes that consumers are fuming about as the summer touring season begins.
Tomorrow, B.C. introduces its controversial 2.4-cent carbon tax on gas, the first in North America.
Prices have changed dramatically since the Liberals announced it on Feb. 19.
On that date, the pump price at 41st Avenue and Oak Street in Vancouver was $1.09. Last week, it was around $1.47.
The new tax means governments will receive 40 cents from every litre sold at the benchmark $1.47 price.
Other taxes in Metro Vancouver (see chart) include 12 cents for TransLink and a 1.5-cent federal deficit-reduction tax slammed by Bader as a "tax grab."
"The deficit has been gone for 10 years," she says. "Six billion dollars has been raised from it since 1998. Given the budget surpluses, it's very irresponsible. Families are hurting and they're being gouged."
The five-per-cent GST is levied on gas taxes as well as the gas itself; for example, B.C.'s 2.4-cent carbon tax will be subject to GST, further raising the price to consumers. As gas rises above $1.47, so will GST revenue.
"There should definitely not be a tax on a tax," says Bader.
Over one year, a 40-cent increase in the price of a litre would result in $400 million extra GST for the federal government. Its extra revenue is $120 million so far this year, because the dramatic spike in prices is relatively recent.
Jock Finlayson, vice-president of the Business Council of B.C., says the GST is "a little dubious."
"It's a volume tax rather than a fixed amount," he says. "The feds could convert the GST to a fixed amount or eliminate it."
Finlayson worries that B.C. will be the only jurisdiction in North America with a carbon tax.
"If we have the tax and other jurisdictions don't, it will put industry at a competitive disadvantage," he says.
But he says the carbon tax won't have an "earth-shattering" effect on the economy.
"It's a low-level tax. It's a tax shift, not a tax grab," Finlayson says.
Chisholm Pothier, spokesman for federal Finance Minister Jim Flaherty, says gas taxes were reduced when the GST was lowered from seven per cent to five per cent.
"Hundreds of millions were saved for Canadians," he says.
Pothier said the government is investing $2 billion in a renewable fuel program, paying car buyers $2,000 to buy fuel-efficient vehicles and giving provinces $1.5 billion to reduce greenhouse gases.
B.C.'s 2.4-cent carbon tax will add $1 to the cost of 40 litres when it comes into effect tomorrow.
Premier Gordon Campbell says the "pollution" tax will fight climate change on behalf of future generations.
"We are living with the cost of climate change in B.C. -- record flooding in 2007, droughts and fire storms in 2003, and an 80-per-cent loss of pines by 2013 due to the beetle infestation," he says.
"We are starting on July 1 to arrest greenhouse gases. We are taking steps to provide the next generation with the kind of world we enjoy.
"I understand people are feeling frustrated with high prices. [But] no one thinks the province of B.C. has driven up prices in the last few months."
B.C. will give back all carbon-tax revenues beginning with a two-per-cent reduction in personal and business income taxes on July 1. Low-income earners will also receive additional tax credits and all British Columbians will receive $100 cheques.
NDP Opposition Leader Carole James says poor people will be squeezed the most.
"Five dollars is a huge difference for a senior," she says. "They don't have that money at the end of the month. The tax is not revenue-neutral in your pocketbook. Costs are increased for heating, food and ferries.
"I've seen the anger building on street corners. Seniors' services are being cut because they can't afford the cost of gas. Let's tax the big polluters, like the oil and gas industry."
James says market forces, which have raised the price of gas 39 cents since Jan. 1, have already done the job the carbon tax was meant to do.
An NDP petition opposing the tax collected 3,000 signatures last week; an Ipsos-Reid poll taken June 5-10 found 60 per cent of British Columbians against the tax.
Chevron spokeswoman Deidre Reid says she is amazed at the sudden rise in oil prices.
"If somebody told me a couple of years ago crude oil would cost $140 a barrel, I wouldn't have believed it," she says.
"Metro Vancouver drivers have one of the highest provincial tax rates in the country. Only Newfoundland is higher."
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