Published Friday 15 June 2012
An old maxim says that only two things in life are guaranteed: death and taxes. If you drive a vehicle in Ontario, you might add one more item to the list: gas prices will increase during the summer months.
I’ve been driving for almost 40 years and I can’t recall a summer when gas companies haven’t raised fuel prices from June to September, especially prior to long weekends.
Occasionally, a government minister will suggest that big oil and gas companies are colluding to keep prices high. Most consumers believe that to be the case. In fact, a recent high profile case saw gas retailers in Ontario and Quebec charged with price fixing.
The answer to high gasoline prices isn’t with government intervention. This matter has been studied for years with provincial and federal inquiries, and the findings conclude that consumers actually benefit from the current competitive market system. Consumers can choose stations that offer the best price.
However, the provincial and federal governments could offer motorists some relief at the pumps by reducing the amount of taxes on gasoline.
According to Natural Resources Canada, the average price of gasoline in Toronto on May 22nd was 128 .3 cents per litre. The tax paid to the federal government and provincial governments was 39.4 cents per litre, or 31 per cent.
The taxes paid on every litre of gas sold in Ontario includes:
14.7 cent Provincial Gasoline Tax;
10 cent Federal Excise tax;
5 per cent Federal Goods and Services Tax (GST); and
8 per cent Provincial Sales Tax.
The application of the HST on the full price of gasoline (that includes the 14.7 per cent Gasoline Tax and 10 per cent Federal Excise Tax) means drivers are being double taxed (a tax on a tax). Is that being fair to the taxpayer?
The price of gas is actually a symptom of a larger problem for Ontario drivers, which is the high cost of vehicle ownership. The cost associated with operating a vehicle is taking an increasingly large bite out of the family’s budget.
In 2010, the Canadian Automobile Association released a report that said the total annual ownership cost of operating an entry-level sedan was $8,539.94 (based on driving 18,000 km per year). That was when fuel was $1.02 per litre.
In March, Ontario’s drivers were hit with additional costs for driving a vehicle. Licence plate renewals are increasing, as are the cost of a driver’s licence and licence renewals. These new driver and vehicle taxes will give the provincial government $340 million in additional tax revenue.
The latest attempt to penalize drivers came in April, when a Toronto councillor floated the idea that Toronto should consider implementing road tolls on the Gardiner Expressway and Don Valley Parkway for non-Toronto residents to fund transit expansion.
The Trillium Automobile Dealers Association estimates that Ontario drivers paid $15 billion in taxes and fees last year, $9.6 billion of which went directly to the Ontario government.
To put that into context, that is more money than Ontario collected from the Corporations Tax ($8.3 billion) in fiscal year 2010-2011.
Ontario is projected to have a $15 billion deficit this year. Why is it always drivers who are targeted when the government needs to raise more revenue?
Critics argue that more drivers should use public transit, but for the majority of Ontario’s 9 million drivers, public transit is not an option. Whether it’s getting to and from work, shuttling kids to soccer practice or getting groceries, driving a vehicle is a necessity in this province.
It’s time all levels of government stopped targeting drivers and started looking elsewhere to keep their fiscal houses in order.
Next week, I’ll look at what drivers can do to minimize the cost of vehicle ownership in Ontario.
Trillium Automobile Dealers Association president Frank Romeo is a new car dealer in the GTA. This column represents the view of TADA. Visit tada.ca or email firstname.lastname@example.org