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EDITORIAL: Tax cuts won’t fix rising gas prices

Fuel in Canada is heavily taxed, but other factors also affect the cost
Motorists in Canada are continuing to face high prices at the pumps. THE CANADIAN PRESS/Graham Hughes

The cost of driving is no picnic.

This year, fuel prices have escalated across Canada and most if not all motorists in the country are paying more than $2 a litre. The rapid rise in gas prices is noticeable and motorists are feeling the effects every time they fill up.

Rising fuel prices are also affecting the cost of transporting goods. These costs are then passed on to the consumers. Some have suggested reducing or eliminating taxes on fuel as a way to provide some relief from the escalating fuel costs.

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At first glance, this seems like a good solution. Fuel in Canada is taxed heavily and reducing the tax burden would result in a much-needed price break for drivers.

Motorists in British Columbia pay between 35.55 and 48.05 cents a litre in gasoline taxes, not including the GST. These taxes include a federal tax of 10 cents a litre, a provincial tax of 14.5 to 27 cents a litre depending on one’s location and 11.05 cents a litre as a carbon tax. (The rates are not the same for diesel-powered vehicles.) In addition, the five per cent Goods and Services Tax is applied to fuel purchases.

Any fuel tax reduction would have an effect on motorists at the pumps. However, before advocating this form of tax relief, consider its potential effects.

Cutting taxes on fuel would mean governments at the federal and provincial levels would need to increase tax rates in other areas to make up the shortfall. Alternately, some services now provided by governments could be cut or eliminated.

Neither of these options would be welcomed.

In addition, it should be remembered that the dramatic rise in fuel costs this year has not been caused by significant tax increases or new taxes. Rather, international events, especially the conflict in Ukraine, have affected fuel prices around the world. As this conflict continues, it is possible that crude oil prices and gas prices for motorists will continue to increase.

Gas tax relief provides a break for motorists, but it does nothing to address the root causes of the increasing fuel prices.

– Black Press

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About the Author: Black Press Media Staff

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