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Like the GST, fuel taxes are here to stay

That was a good one, David, you really had us going there for a minute.When federal Transport Minister David Collenette suggested earlier this month that a fuel tax increase should be considered to he...


That was a good one, David, you really had us going there for a minute.

When federal Transport Minister David Collenette suggested earlier this month that a fuel tax increase should be considered to help major cities fund their infrastructure needs, I at first didn’t know whether to laugh or get mad.

Surely the suggestion was the punch line of some joke that I didn’t quite get – it couldn’t be a serious consideration from a government that’s starting to once again slide into election mode. If he was serious, it’s another example that the federal Liberals are getting a little too comfortable in their cushy parliamentary seats.

Sure, it’s important to get some much-needed cash into the coffers of the country’s largest municipalities. Canadian cities are all struggling with their own transportation issues and their hands are somewhat tied when it comes to generating revenue.

But here’s an idea – why don’t the feds transfer a bit more of the existing federal fuel tax revenues to municipalities? At least then, some of the money generated by fuel taxes may actually go towards improving roads and infrastructure. After all, that’s the general principle behind fuel taxes – at least, it was in the beginning.

But currently only four per cent of Ottawa’s annual $5 billion take in fuel taxes is returned to municipalities for investment in transportation.

Instead of thinking about increasing federal fuel taxes, it’s time Collenette reviews some of his party’s past promises regarding the controversial taxes. In 1995 – two years after the Liberals took over Parliament Hill – the government increased fuel taxes 1.5 cents per litre. At the time, the government promised it was a short-term tax increase that would be eliminated when the nation’s budget deficit was dealt with.

Well, five years after the elimination of the budget deficit, the fuel tax remains. Like the Goods and Services Tax (GST), this so-called “temporary” tax isn’t going anywhere.

The Canadian Taxpayers Federation (CTF) says $3 billion has been raised through this tax since the elimination of the deficit.

“Since the deficit was eliminated, the federal government has collected over $3 billion on the basis of that deficit-fighting measure in the last five years,” says John Carpay of the Alberta branch of the CTF. “We’ve been saying for years to put money back into roads and if they want to start by putting 1.5 out of the 10 cents (in federal fuel taxes) back into roads, that’s a good start, we would applaud that.”

Ernie Patterson, mayor of Claresholm and an Alberta Urban Municipalities Association vice-president, adds “Instead of going into general revenues now that the deficit has been met, it is extremely important that this starts getting back to pay for transportation improvements. If some of the money came back maybe it would solve problems on our main highway systems.”

Canada needs to take a page out of the U.S. book of fuel tax allotment when it comes to distribution of fuel taxes. South of the border about 80 per cent of national fuel taxes are earmarked for highways. This is evidenced by the country’s superior road system.

In Alberta, of the $700 million paid in federal fuel taxes, only a measly one per cent comes back for investment in the province’s infrastructure.

The situation is just as bleak right across the West – perhaps even more so in the Greater Vancouver Area where drivers shell out an additional four cents per litre to support the dysfunctional transit body known as TransLink.

Fortunately, I wasn’t the only one who thought the idea of raising fuel taxes yet again was nothing but a bad joke. Collenette’s comedy act was met by little applause, the general reaction being stunned silence and sporadic outbursts of rage. Collenette’s critics were quick to take the opportunity to rake him over the coals for the idea and he even took some jabs from within his own corner.

Deputy Prime Minister, John Manley went on record to say raising fuel taxes yet again wasn’t an option. Collenette then sheepishly backpedaled and agreed other options could be explored to get much needed funding into the hands of municipalities.

While Manley admits increasing fuel taxes may have been pushing the Liberals luck a little too far, now is as good a time as ever to remind your MP it’s time the “temporary” 1.5 cent per litre fuel tax introduced in 1995 is rescinded. Or at the very least, dedicated to our nation’s ailing road system.

James Menzies heads our western news bureau and he can be reached at 403-275-3160.

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