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August 2005 Archives

August 31, 2005

No More Excuses – As Gas Prices Soar...

No More Excuses – As Gas Prices Soar it is Time Ottawa Ended its Tax Gouging at the Pumps

St. Andrews (New Brunswick): The Canadian Taxpayers Federation (CTF) continues to speak out on the issue of high gasoline taxes. Overnight the prices of gas jumped to $1.31 a litre in Ottawa, $1.20 in Toronto, $1.15 in Montreal and $1.13 in Vancouver. The price hikes come amid reports of extensive damage to oil platforms in the Gulf of Mexico caused by hurricane Katrina. The CTF has led the charge in blowing the whistle on tax gouging at the pumps, and is again calling on the federal government to act by lowering fuel taxes.

“Approximately one third of the price of a litre of fuel in Canada is taxes. Taxpayers want action in the form of lower taxes on fuel, not more excuses from federal politicians why gas taxes cannot be reduced,” stated CTF federal director John Williamson. “It is time Ottawa ended its gas gouging. This can be accomplished with three easy steps. First, Ottawa should end its GST/HST tax-on-tax bite. This will lower the price, on average, by 1.5 cents a litre. Next, scrap the deficit elimination tax, which will save another penny and a half. Lastly reduce the federal levy by 2 cents, bringing the total saving to motorists to 5 cents a litre.”

In fiscal 2004-2005, the federal government collected $4.5-billion in combined federal gasoline and diesel taxes (not including GST revenue), an 18 per cent increase over what was collected ten years earlier. One explanation for the rise is the steady increase in gasoline tax rates. The federal gasoline levy increased 567 per cent between 1985 and 1995 – from 1.5 cents per litre to 10 cents per litre.

In 1995, the year Ottawa’s gasoline tax jumped from 8.5 to 10 cents per litre the hike was labeled a “deficit elimination measure” by then-Finance Minister Paul Martin. Canada’s deficit was vanquished in 1997-1998, but the deficit reduction tax remains and the federal government’s gouging at the pumps continues even with multi-year, multi-billion dollar surpluses.

Another contributor to growing federal gasoline tax revenues is the GST and HST (paid in New Brunswick, Nova Scotia and Newfoundland & Labrador). The GST and HST are charged on the full pump price, gasoline taxes included. The tax is levied on Ottawa’s 10 cent per litre fuel excise tax as well as provincial taxes, which range from a low of 9 cents/litre to a high of 20.5 cents/litre. As pump prices climb, Ottawa rakes in even more GST revenues. Between 1996-1997 and 2004-2005, GST revenues from gasoline sales increased from $909-million to $1.2-billion – a 31 per cent increase. At current price levels, the federal treasury will collect at least another $300-million over the next year — bringing total GST revenues from gas to over $1.5-billion.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]



August 26, 2005

Debunking the Prime Minister’s Gas Tax Spin

Paul Martin dug in his heels this week and ruled out lowering gasoline taxes. Canadians will continue to pay through the nose for gas thanks to high oil prices and fuel taxes, which account for one third of the pump price. Prices now average more than one dollar per litre – meaning 33 cents is tax – and family budgets are being squeezed. Yet according to the Prime Minister the price hike does not mean more tax revenue for Ottawa because with higher prices consumption falls.

“The federal government does not make money from increasing gas prices,” he told reporters Monday with a straight face. This is not true. For every 10 cent/litre jump in pump prices an additional $175-million in GST revenue flows into Ottawa’s coffers. Gas prices are up approximately 20 cents over 2004 levels.

As for the suggestion that gas consumption falls with price spikes, Mr. Martin knows better. According to Statistics Canada, gasoline sales increase at an average rate of just over one per cent a year. In 1985 retail sales were 32-billion litres and last year sales exceeded 40-billion litres. Higher gas prices mean consumers have less savings or disposable income to purchase other goods and services.

Mr. Martin’s other line of defence against reducing taxes is that the revenue is going to cash-strapped cities and lowering taxes will endanger this funding. This is absurd. Over the next five years Ottawa will provide $5-billion to cities and communities. According to the 2005 budget, the funding transfer is $600-million this year and will increase to $2-billion – equivalent to a third of total gas tax revenues – in 2009.

Budget estimates pegged total fuel tax revenues from the 10 cent/litre excise tax at $4.68-billion this year. (See data chart.) GST revenues will add another $1.35-billion. Ottawa’s total take is projected to be $6-billion this year. Once the gas transfer is deducted Ottawa will be left with $5.4-billion. Even after Ottawa transfers a generous $2-billion to cities in 2009 more than $4-billion will remain in the government’s kitty. All told, Ottawa will relocate $5-billion to municipalities over the next five year and collect an eye popping $30-billion from motorists. The difference between gas revenues and the gas tax transfer is a staggering $25-billion – a cushion so large it leaves taxpayers to wonder if the Prime Minister is mocking them when he says he cannot reduce gas taxes.

But then, the federal government seems generally unconcerned about the welfare of the average taxpayer. How can Liberal MPs, for example, defend charging motorists the 1.5 cent a litre “deficit elimination” gas tax when the deficit vanished seven long years ago? Why do they continue to charge taxpayers for something – i.e. the deficit – that does not exist? Why is GST charged on the total pump price, gas tax included? This tax-on-tax scam, on average, adds another penny-and-a-half to pump prices. (In New Brunswick, Nova Scotia, and Newfoundland & Labrador the 15 per cent HST adds a stunning 3.8 cents per litre!)

Canadians cannot control the world price of oil, but there is plenty that can be done to reduce fuel taxes. A 3 cent/litre reduction will return $1.2-billion to motorists and a 5 cent/litre cut will pump $2-billion back to taxpayers. Even with such a modest gas tax reduction the federal government will still collect billions of dollars in fuel tax revenues each year.

Mr. Martin, you have no more excuses.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

August 25, 2005

Canada Post Committed to Rural Delivery

In a statement from the Honourable John McCallum from Lumsden, Saskatchewan, August 25, 2005, Canada Post renewed its commitment to the moratorium against rural post office closures. While the statement indicated that there may be some instances where the closure of a rural post office is unavoidable, the statement emphasized "this government is committed to keeping rural post offices open".

"In recent months there have been several statements made that Canada Post has targeted several rural post offices for closure. This is simply not true. The Government of Canada recognizes that rural post offices play an integral role in rural Canada and for that reason I can state definitively that, if there is a post office in your community today, it will continue to be there into the future."

For more information, the news release can be found at:
http://www.cra-arc.gc.ca/cpc/0825release-e.html

Posted by Taxes.ca Editorial Team [permalink]

August 23, 2005

My Account - a handy tool

My Account is a Canada Revenue Agency (CRA) online service designed to give you the convenience and flexibility of managing your personal income tax, Canada Child Tax Benefit (CCTB), and Goods and Services Tax (GST) Credit accounts on a secure website.

My Account allows you to access personal information such as your:
• tax refund or balance owing;
• account balance and payments;
• actual income tax returns;
• instalment account;
• Registered Retirement Savings Plan, Home Buyers’ Plan, and Lifelong Learning Plan status;
• CCTB and related provincial and territorial programs payments and account balances; and
• GST Credit and related provincial programs payments and account balances.

You can use My Account to manage your personal income tax account online, including:
• changing your address or telephone number;
• changing your tax return, after it has been filed and assessed; and
• disagreeing with your assessment – although we strongly urge you to consult with your accountant before taking this step yourself.

You cannot make payments through My Account. Likewise, you cannot print instalment reminder statements from My Account for purposes of remitting an instalment at your bank. This is because the remittance form has special magnetic ink required for processing by the financial institutions.

To access the services available through My Account, you will have to register for a Government of Canada epass. Registration is a three-step process wherein you:
1. authenticate yourself with the CRA by providing specific personal information (your social insurance number, your date of birth, the amount reported on line 150 of your 2003 or 2004 income tax return, and your postal / zip code);
2. create an epass User ID and Password, after which CRA will mail your personal CRA Activation Code to you; and
3. upon receipt of the activation code (which has an expiry date), return to the My Account page and enter the code.

This service is secure and you can help keep it that way by not providing your personal information to others (i.e. SIN, line 150 amount, activation code, etc). If you are logged into the My Account service and you do not perform any activity for more than 20 minutes, your session will automatically close and you will have to log in again to continue.

Currently, My Account is not accessible by third parties including your spouse and other family members, your accountant or your banker / broker. Even if your accountant has authorization allowing CRA to speak directly with them, they cannot access your information through My Account. In 2006, CRA is expecting to offer an online service for representatives that will allow them, when authorized, to access information and services for clients.

The CRA website http://www.cra-arc.gc.ca/eservices/tax/individuals/myaccount/menu-e.html has very helpful, easy-to-read information about My Account and the process for using My Account is quite user-friendly. It’s a terrific tool for determining, confirming or changing / updating personal information. Depending on your specific needs at the time, it’s a great alternative to the busy signals and long waits when calling CRA. There is tremendous future potential with this system.

Caren MacLeod, CGA
Tax Manager
Scott, Rankin & Gardiner

Posted by [permalink]

August 16, 2005

Does Canada Have an Official Opposition?

Conservative leader silent on gas taxes, surplus update, daycare and smaller government.

Lost opportunity to advance taxpayers’ interests.

Ottawa: The Canadian Taxpayers Federation (CTF) today reacted to Conservative leader Stephen Harper’s failure to articulate public policies on his summer tour of Canada. "The leader of the Official Opposition has been invisible this summer," said CTF federal director John Williamson. "The public is listening for a clear voice, rather than an echo, to challenge the status quo in Ottawa. No federal politician is championing the need to cut gas taxes as a way to offset rising pump prices, or the importance of reducing Ottawa’s multi-year, multi-billion dollar surpluses with income tax relief."

With a general election to be called 30 days following the release of the Gomery Inquiry report, the CTF is pressing the political parties to adopt taxpayer friendly policies. Until the federal campaign is underway, the minority Parliament presents numerous opportunities for opposition members to influence government legislation. The priority of the CTF is to advocate for lower taxes, less waste, and more accountable government. Regardless of where an MP sits in the House of Commons, the CTF will highlight political parties and party policies that are out of touch with the common sense of ordinary taxpayers.

Gas Taxes:

Gasoline prices have jumped to a weekly average price of over 93 cents per litre, and have surpassed $1 a litre in many parts of Canada. "Because of the Liberal government’s support for the Kyoto Protocol, Ottawa is unlikely to reduce gas taxes unless faced with significant public and political pressure before the election," noted Mr. Williamson. "Public pressure is certainly out there, but where are Mr. Harper’s Conservatives? It is time to loudly demand removal of Ottawa’s ‘deficit elimination’ gas tax, and end the practice of applying GST to gas taxes."

Growing Surplus and Tax Relief:

The federal surplus, in fiscal year 2004-2005, is estimated to be $8-billion, which is $5-billion higher than the Liberal government predicted in the last budget. "The Official Opposition’s response to the surplus news was to offer a critic of Ottawa’s accounting methods," said Williamson. "The party leadership should be shouting from rooftops that it is time to end Ottawa’s over-taxation of Canadians with broadly based tax cuts, not another costly budget written by the NDP."

More Efficient Government:

It was reported in the Globe & Mail last week that Ottawa is proposing a shakeup of the public service that could eliminate tens of thousands of redundant jobs and save between $2-billion and $4-billion a year. The size of the federal public sector has ballooned to levels that existed before the deficit was eliminated. The Conservative Party issued a release denouncing the measures and for leaving "public servants feeling insecure about their futures, and [damaging] morale." "We thought the Conservative Party favoured making changes to create a smaller, more efficient government and provide government services at less cost to taxpayers. Apparently, we were wrong," said Williamson. "The party instead appears to now support an ever-expanding state."

Daycare:

Maclean’s reported in its June 29th edition the Conservative Party will unveil its new daycare policy to provide parents with greater choice – primarily with some level of financial assistance for stay-at-home parents – than the Liberal proposal, which is to only fund regulated daycare service. The magazine reported the announcement would come "in the next few weeks." No announcement has been made.

Corporate Welfare:

The Conservative Opposition no longer opposes the practice of handing tax money to businesses and other so-called “economic development" schemes. "The party simply wants corporate welfare programs, like Technology Partnerships Canada, to be more transparent and accountable," stated Williamson. "And sources tell us the party is now considering altogether abandoning its vow to critically review Ottawa’s regional development agencies, like ACOA, in advance of the next election campaign."

"Taxpayers want a voice, not an echo in Parliament. Mr. Harper is not advancing a credible vision to challenge the government’s tax-and-spend agenda. His summer of silence has not helped advance taxpayers’ issues and some party pronouncements are out of step with what taxpayers want from government, which is a well-organized bureaucracy," concluded Williamson. "In a minority Parliament there are many opportunities to advance taxpayer friendly policies and the Official Opposition should be taking advantage of them."

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

August 11, 2005

Painful Gas Taxes

Blame Government for Pain at the Pumps

Ever feel like placing a 9-1-1 call to report a robbery whenever you pull up to the pumps? Gasoline prices have now jumped to a weekly average price of over 90 cents per litre, and have regularly surpassed $1 per litre in many parts of the country.

The pump price motorists pay can be broken down into four components: crude oil costs, refining costs, retailer's profit margin and gas taxes. Depending on the province, gas taxes represent between 30 and 43 per cent of the pump price. On average, taxes account for about 38 per cent of the pump price.

Alberta has one of the lowest provincial gas tax rates at 9 cents per litre. Vancouver’s provincial/municipal gas tax is a whopping 20.5 cents a litre. Quebec’s provincial levy is 15.2 cents/litre, plus motorists pay a 7.5 per cent sales tax on gas, and Montreal drivers are whacked with an additional 1.5 cent tax on each litre of gas they buy. Down east, Atlantic Canadians are hit mighty hard by the 15 per cent Harmonized Sales Tax (HST) at the pumps.

The original argument for imposing higher gasoline taxes was to curb consumption. But consumption has chugged along and so has governments’ tax take. Between 1985 and 2003, gasoline sales steadily increased at an average rate of just over one per cent per year. According to Statistics Canada, retail gasoline sales in 1985 were just over 32 billion litres and just over 40 billion litres in 2004.


In fiscal 2004-2005, the federal government collected $4.5-billion in combined federal gasoline and diesel taxes, an 18 per cent increase over what was collected ten years earlier. One explanation for the rise is the steady increase in gasoline tax rates. The federal gasoline levy increased 567 per cent between 1985 and 1995 – from 1.5 cents per litre to 10 cents per litre.

Many of these tax hikes were sold to Canadians as a way to reduce the federal deficit. In 1995, the year Ottawa’s gasoline tax jumped from 8.5 to 10 cents per litre the hike was labeled a “deficit elimination measure” by then-Finance Minister Paul Martin. Canada’s deficit was vanquished in 1997-1998, but the tax remains and the federal government’s gouging at the pumps continues even with multi-year, multi-billion dollar federal surpluses.

Another contributor to growing federal gasoline tax revenues is the GST and HST (paid in New Brunswick, Nova Scotia and Newfoundland & Labrador). The GST and HST are charged on the full pump price, gasoline taxes included. It is a tax levied on the other gas taxes. And as pump prices climb, Ottawa rakes in even more GST revenues. Between 1996-1997 and 2004-2005, GST revenues from gasoline sales increased from $909-million to $1.2-billion – a 31 per cent increase! At current price levels, the federal treasury will likely pump another $175-million over the next year — bringing total GST revenues from gas to over $1.35-billion.

It is time Ottawa end its gas gouging. This can be accomplished with three easy steps. First, Ottawa should end its GST/HST tax on tax bite. This will lower the price, on average, by 1.5 cents a litre. Next, scrap the deficit elimination tax, which will save another penny and a half. Lastly reduce the federal levy by 2 cents, bringing the total saving to motorists to a cool 5 cents a litre.

Canadians unhappy about gas prices should blame the government – particularly the rascals in Ottawa – because they have the ability to lower taxes. With crude prices and consumption predicted to climb, it is time the federal government give motorists a break at the pump.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

Centres of expertise to address international tax planning

Revenue Minister McCallum and the Canada Revenue Agency have announced the creation of 11 centres of expertise to address aggressive international tax planning.

"I am committed to ensuring a level playing field for all Canadians, and that is why I take the issue of tax havens seriously," said Minister McCallum. "The CRA is continually challenging aggressive international tax planning structures and the new Centres of Expertise will equip the CRA with even more tools to ensure that everyone is paying their required share of taxes."

According to the CRA news release, the centres "represent a new way of doing business for the CRA by bringing together audit professionals from the areas of international tax, special audits and tax avoidance to create teams of experts, the CRA is ensuring a more coordinated approach in addressing aggressive international tax planning and the abusive use of tax havens."

Centres of Expertise will be located at Tax Services Offices in Burnaby, Calgary, Halifax, Laval, London, Montréal, Ottawa, Saint John, Toronto West, Vancouver, and Winnipeg.

For more information, see the news release on the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/releases/2005/aug/nr050809-e.html

Posted by Taxes.ca Editorial Team [permalink]

August 5, 2005

"Inflict Pain"

Academia's Recipe for Recession a la Kyoto

Two Ontario university academics have offered their prescription on how to ensure Canada meet its Kyoto obligations. It is, they write, to "inflict pain" on businesses and individual Canadians. In the summer edition of Policy Options, a magazine dedicated to examining policy quagmires, the University of Toronto's Douglas Macdonald and Debora VanNijnatten from Wilfrid Laurier University call on Ottawa to get radical.

"What kind of pain is called for," they ask. For starters, the pummeling of Alberta's oil industry, binding emissions-reduction quotas, and a job-killing 150% increase in the amount of emissions that businesses are required to make. Next they want higher gas prices and costlier home energy bills to reduce business and individual oil consumption. They conclude that "infliction of such pain is politically viable."

How easy it must be to call for inflicting economic pain on businesses and taxpayers – all from the cozy, tenured confines of the ivory tower. Tenure exists to ensure academic freedom. But the disregard for the wellbeing of Joe Sixpack and Jane Lunchbox – ordinary Canadians – by these academics is astounding. Callously imposing hardship on a people is normally the domain of repressive dictators.

In the 1950s, William F. Buckley, who is perhaps the most important figure in modern conservatism, took aim at faddish leftist ideology embraced by university faculties but at odds with the values of average Americans: "I would rather be governed by the first 200 names in the Boston phone book, than by the Harvard faculty." Fifty years on, Mr. Buckley's rebuke of academia still rings true.

But such thinking clearly drives Ottawa's Kyoto program. The Kyoto Protocol commits Canada to reduce average carbon dioxide emissions to 6% below 1990 levels by 2010. This might not sound like much. But because the country's output of greenhouse gases has increased by 30% since 1990, crippling cuts in energy output are necessary to comply with the international agreement. The retail price of gasoline, for example, will need to rise by as much as 50% to curb consumption.

Industry Minister David Emerson was forced to admit in April that Canada will need to buy emission credits from developing countries. Many economists and environmentalists regard this as purchasing "hot air" since nations that sell surplus gases need not reduce their current CO2 output levels. The result is Canada will continue to pump out emissions and claim victory while it pays foreign governments for credits. This is absurd public policy.

More recently, the Environment Ministry bypassed Parliament and issued a regulatory notice for a carbon tax. Fines start at $200 per excess tonne. This policy change signals Ottawa's intention to penalize companies that engage in routine economic activities. The tax will negatively affect all Canadians.

The more Canadians learn about Kyoto – its foolish assumptions and skyrocketing costs – the less they like it. The 2005 budget stated that Kyoto would cost some $5-billion. When the climate plan was released two months later the cost had jumped to $10-billion. What does Ottawa have to show for this money? A costly implementation plan that even environmental groups say is unworkable. Hot air purchases, more taxes and ineffectual spending – it is no wonder the U.S. and Australia refused to ratify the treaty, and others, like Japan, say their targets will not be met.

Canada will not come close to hitting its reduction targets unless Ottawa is willing to trigger a made-in-Canada recession. If this sounds alarmist remember that emissions increase with economic growth. To roll them back means shrinking the economy or achieving negative growth. The economic term for 2 quarters of negative growth is a recession. Fewer jobs, an underperforming economy, and higher energy prices will result in household income dropping, in real terms, by $3,000 – annually – by 2010. Yet this is the medicine Kyoto fundamentalists are calling for.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]