Several weeks ago Finance Minister Goodale was interviewed on the Roy Green show on CHML. Roy Green asked him why the government still charges a deficit fighting excise tax even though we haven't had a deficit in eight years and why the government charges GST on this tax. The excuse of the time was the savings at the pump would immediately be eaten into by increased adminstrative costs in figuring out the different taxes.
It appears that Minister Goodale has finally figured out that this is the lamest excuse possible and is now blaming it on the oil companies. You see if the government were to reduce gas taxes by 2-3 cents/litre the gas companies would increase their prices "in 30 minutes". Really?
Let's compare two geographically close cities under different tax regimes, namely Toronto and Detroit. I can get gas at Shell in either city. Shell is a Dutch company so there would be no reason why they would decide to profit maximize in one location and not in another.
According to GasBuddy you can pay $1.007/L for gas in Toronto today. In Detroit you could pay $3.39/g. Converting that is $1.007/L in Toronto and $0.746/L in Detroit. If Minister Goodale is correct why is gas not $1.007/L in Detroit? Do you think he is spinning?
The real reason is that the Liberals want to take this gas tax money and transfer in to the municipalities. In short, they would rather spend the money on their priorities than letting you keep your own money. But you already know that. That is how taxes work. The government decides they know better than you do how to spend your money. Hey, you may agree with that. Canadians keep voting that way. But let's at least call a spade a spade.
Update: The Ottawa
Citizen has more on this lame excuse.
...That's an interesting line of reasoning from the man in charge of Canada's economy. Whatever conspiracy theorists think, the gas business is highly competitive: drivers have an easy time shopping around for the best price. Any gas station whose owner decided to pocket a tax cut would watch his customers driving to his competitor across the street.
It's also discouraging that Mr. Goodale doesn't seem to recognize that a tax policy established when gas cost 55.4 cents a litre, as it did on average in 1995 (67 cents in today's money) might not necessarily make sense when gas costs a dollar.
