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Give Us a Break – Last Thing We Need is Another Gas Tax.

May 11, 2007

David Suzuki and Dennis DesRosiers have made the case in these pages for the imposition of an environmentally motivated tax on gasoline in Canada. The silence in response is remarkable. This could be due to the stunningly successful public relations campaign that has turned Al Gore into a rock star, heightened Mr. Suzuki's reverence and sent those who would take issue with them into hiding. No matter the reason, their proposal requires a second look.Their argument was accurately portrayed by the headline "It's time to think the unthinkable: Put a tax on gas." Yet, what is meant by "think the unthinkable" and put "a" tax on gas? Not only do Canadians already have "a" tax on gas, we've got lots of them.The Canadian Automobile Association reports that the average total of taxes on gasoline is 43 per cent. This includes a federal excise tax, provincial tax, GST, provincial sales tax and, in Montreal and Vancouver, a transit tax. Consider that the average oil company profit on the sale of gasoline equals 3 per cent of the pump price and it becomes clear that the greatest beneficiary from the purchase and sale of gas at the pump is not Big Oil but Big Government.And while the argument is made that Canadians have come a long way from the day when Joe Clark's government fell partly on its attempt to impose an 18-cent-a-gallon gas tax, there is considerable evidence that taxing Canadians on their gas consumption has done little to affect their consumption. Environment Canada, for instance, points out that, during the current era of 43-per-cent taxation on gasoline, this country's total transportation-related greenhouse-gas emissions grew by 27 per cent between 1990 and 2004.Further, while several European countries have imposed environmental taxes on gas in recent years, the European Union's record on the growth of transportation-related gas emissions appears to be significantly worse than Canada's.According to the EU's website, transportation-related greenhouse-gas emissions account for 28 per cent of the European total and are on track to increase by 40 per cent compared with 1990 levels. Europe's Kyoto commitment is to reduce emissions of six greenhouse gases by 8 per cent of 1990 levels by 2008-2012. So, despite the fact that Europeans have imposed environmental gas taxes and pay two to three times as much for gas as do Canadians, growth in transport-related emissions in Europe is at 40 per cent since 1990 compared to Canada's 27 per cent.Taxation doesn't stop people from doing things they need to do, such as heating their homes. If the purpose of taxation were to modify behaviour, then Canadians would have stopped earning income long ago (or never sought to earn any more once they hit the marginal rate) or investing.What excessive taxation does do is make people poorer by raising the cost of, and hence lowering, their standard of living. Employees suddenly faced with paying, say, $50 more a month in gas prices will look first to their employers for an additional $90 a month in income that, after taxes, will give them the $50 they need to keep level with the hike in gas prices. Those companies, in turn, will increase their pricing to consumers to maintain profitability. And so it goes.If the environmental movement is to find success in moderating the behaviour of Canadians, it needs to create 21st-century solutions to 21st-century problems. Looking back for discredited central planning solutions such as tax hikes is not the answer. If it were, the problem would have already been solved.PETER MENZIESPast publisher of the Calgary Herald and a senior fellow with the Work Research Foundation