Hidden Gas Tax Gouging NBers At The Pumps

Premier must reinvest $275 million back into highways, roads and bridges in 2007/08

With the Victoria Day weekend upon us and marking the unofficial start to our summer season, there is no question that many people will be planning to travel. Unfortunately, those who are planning to take to the road this summer may find themselves in a huge dilemma, since high gasoline prices will definitely become an obstacle to their all-important travel plans.

That is why, in congruence with the CTF's 9th Annual Gas Tax honesty Day, New Brunswick Taxpayer is calling on Premier Shawn Graham to follow in the footsteps of both the Saskatchewan and Manitoba governments by passing a Gas Accountability Act. As motorists begin to take to the highways this summer, they will unfortunately be reminded of the high tax component hidden in the total price of gasoline. A tax which is unfairly gouging many New Brunswickers at the pumps.

For example, of the total $275 million in provincial revenues collected from gas taxes and fees, only 62% of that is reinvested back into highway infrastructure, bridges and roads. Though we commend the premier for keeping his election promise to lower gas taxes by 3.8 cents per litre, we are hopeful that he will do the right thing and reinvest 100% of the total revenues collected by gas taxes and fees back into highway infrastructure, bridges and roads for 2007/08.

Moreover, NB Taxpayer is also urging the federal government to reduce the regressive gasoline tax, as it is gouging too many consumers. At the moment, taxes account for approximately 33 per cent of the pump price, on average.

And to add insult to injury, the GST is being charged to the full price one pays at the pump (every 10-cent increase at the pumps results in government bringing in a total of $175 million in GST revenues). In other words, it is nothing more than a tax on a tax - where revenues collected by Ottawa will range in the billions of dollars for 2006-07, around $1.5 billion to be exact.

To understand the breakdown, one can refer to the diagram below which illustrates how the cost of a typical litre of gasoline (assuming a retail price of $1 per litre) is affected by federal and provincial taxes, as well as costs for crude oil, marketing and refining.(note: PST and HST vary from province to province)

Approximate Price Components of Gasoline at $1 per Litre (in cents)

click on imgage to enlarge

Note: Values for crude, refiner and retailer are estimated and are for demonstration purposes only.

The hidden gas tax is unfair and should be treated as such. That is why the government, at both the federal and provincial level, should treat it as a user fee. In doing so, the money could be reinvested back into highway infrastructure, bridges and roads and, in turn, would go a long way in reducing municipal taxes, especially since a good percentage of local taxes goes towards maintaining roads.