Angry in the Great White North

From the Toronto Star:

[Prime Minister Paul] Martin has vowed government watchdogs will be vigilant on behalf of consumers. But [Finance Minister Ralph] Goodale has rejected suggestions Ottawa cut the GST on fuel, saying such a move would only save a few cents a litre and that would be quickly swallowed up by price shifts at the pump.

He's right that the GST is not going to make a great deal of difference. It is the excise tax, which is calculated on a per-liter basis, that needs to come down.

He never mentions that. Just the GST, a paltry 7%. The excise tax comes in at 10 cents a liter. Cut that in half, and you start to make a difference.

I analyzed the gas taxes last month.

But the problem, according to Goodale, is that if he knocks a few cents off the price of gas by reducing taxes, the gas station owners will profit from it. The savings would "be quickly swallowed...at the pump".

This is man in charge of our finances? Two points:

1. First, the competition will bring prices down. Does he even buy gas? As soon as one gas station owner shaves a penny or two to drum up business, now that he has room because of lower taxes, all will follow.


2. Second, so what? If I had a choice, I would rather the profits go to the gas station and the gas companies than to the government. Government revenue represents economic activity that is not happening. No jobs. No wealth generation. But leave it to the government to argue that leaving money in private hands is a bad thing.

Finance Minister Ralph Goodale has confirmed that Ottawa may provide fuel rebates for low-income households or those on fixed incomes to help consumers cope with skyrocketing home heating costs.

"We have to think about what will happen to seniors this winter, as well as others," explained Tony Ianno, the minister of state for families. But he said no final decision on rebates has been taken by the government.

Augh!! Create an expensive bureaucracy just to give the money back?! Don't take the money in the first place!

How simple is that?!

Of course, this is not just about money. My own member of parliament for Ajax-Pickering, Mark Holland, a Liberal:

"The worst thing we could do is slash what little we collect because then we're not working toward any kind of solution," says Ajax-Pickering MP Mark Holland. "We have to come to grips with reality," he says. "We need to wean ourselves off petroleum. We need to see the silver lining in this rather painful situation." (Toronto Sun, September 11, 2005)

Now this is an MP for a suburban city, a bedroom community where the majority of people work in Toronto, a twenty-minute drive away. And yet he talks like a downtown Toronto MP who can get everywhere he needs to go by bus.

If we get off petroleum, it will happen because the cost of petroleum naturally rises to the point at which other technologies are cost-competitive. The government should not be trying to force this to happen with taxes, because should that technology shift happen, all those revenues to which the government has become addicted will vanish. In fact, the government would find itself in the strange situation of pushing hard against moving off oil for that very reason.

Remember too, that we'll never truly get off petroleum. We need it for the plastics industry, unless Mark Holland wants us to cut down trees to fashion more things out of wood. And reducing the amount we drive doesn't help. When you distill a certain amount of crude oil, you get so much gasoline, so much diesel, so much kerosene, so much raw material for plastics, etc. You need to get the same amount of oil out of the ground to feed the plastics industry, regardless of whether people are using the gasolene for driving. If they are not using it for driving, then the oil companies are not making money off of it, which means the plastics industry is going to have to carry more of the cost of drilling and refining oil (since motorists are not sharing that cost anymore), which drives up the cost of everything around you that contains plastic.

Just look around. And not just what you see. Think of the plastics used in the packaging and preparation of foods. Or in medical technology. Rising health care costs, anyone? To pay for that, we'll need...you guessed it...higher taxes.

All these things are connected. If you try to pull on one thread, the whole thing can come unravelled.

Comments like those from Goodale and Holland make me more nervous about the competence of the government than about the cost of gas.