Tuesday, August 23, 2005

Bending Over At The Pumps

Our fearless leader, Paul Martin announced today that the federal government will not cut back on gas taxes. Martin stated that:
"The federal government does not make money from increasing gas prices...Any calculation done of the federal government's bottom line shows there is not any undue benefit occurring in that way." CTV.ca
Martin is also quick to remind us of his so called "new deal" which promises to direct a portion of gas tax revenue to provincial governments and municipalities in order to fund infrastructure and public transit projects. According to the Canadian Taxpayers Federation the deal sucks on several levels and mayors across the country agree that the 'new dea'l is long overdue. Some food for thought:
This year Ottawa will spend only $324 million or 7.2% of its $4.5 billion in gasoline taxes, excluding GST, on highway and road renewal. The federal gas tax increased over 560% between 1985 and 1995, from 1.5 to 10 cents per litre. (well above average inflation levels). Ottawa increased the federal gasoline tax from 8.5 to 10 cents per litre in 1995 as a deficit reduction measure.
Not only is the deficit gone but new numbers show that the federal surplus is larger than our finance minister projected:
Newly released figures show that in the first three months of fiscal 2005-06, Ottawa recorded a surplus of $4.8 billion - including a $1.7-billion surplus in June alone...In last February's budget, Goodale projected a surplus of $4 billion in the current fiscal year, all of which has been earmarked for rainy-day funds rather than spending or tax cuts. - Canada.com

And lest we forget that the humble number cruncher Ralph Goodale has 'underestimated' in the past:
In the most recent miscalculation (2004), Ralph Goodale, the finance minister got the numbers right but the order reversed. He forecast a surplus of $1.9 Billion but it was actually $9.1 Billion...when the feds underestimate the budget surplus, they also reduce spending on things that Canadians want; health care, education, child care, cities, defense, and highways. Once the fiscal year is closed, Canadians have no say where surpluses go. It's automatically goes into the government's piggy bank. "Piggy bank financing is a poor way to build long term programs," says Ellen Russell, senior economist for the Canadian Centre for Policy Alternatives. - Kamloops Daily News
So I think it's pretty clear that Martin's statements about the gas tax are, at best, a little misleading and at the worst totally wrong. The fact of the matter is the federal does make a pretty penny off of gas taxes and in the past has spent it on whatever the hell it wants. I guess only time will tell if the 'new deal' is a good one.


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