By Christine Van Geyn
As Ontarians fill up their tanks to enjoy the first long weekend of the summer, they’re faced with the sticker shock of the high price of fuel. Tackling these high prices must be a priority for candidates in the provincial election.
Gas prices are at a four year high in Ontario with the average Toronto station selling gas for $1.37 per litre. And, while gas prices are impacted by global markets and the price of crude, a huge part of the price is driven by our political leaders. In Ontario, gas taxes account for about 33 per cent of the price at the pump.
If all gas taxes were eliminated tomorrow, instead of paying $1.37 to fuel up you’d be paying 92 cents per litre. You couldn’t find a gas station in the province selling gas anywhere close to that price, but you could find one in New York, where the average price is 90 cents a litre.
And, you could do four cents better in Michigan, where the average price per litre is 88 cents per litre.
To lower the price of gas, politicians need to make affordability a priority and get their fingers out of drivers’ wallets. Only one candidate is taking this issue seriously, so far.
PC party leader, Doug Ford, has made the most tangible and indeed dramatic commitment to lowering gas prices.
Upon entering the race for PC party leader, he immediately pledged to cut the cap-and-trade carbon tax. This would save drivers about 4.4 cents a litre on the price of gas based on the Canadian Taxpayers Federation’s 2018 Gas Tax Honesty Report.
What’s more, yesterday Ford committed to significantly reduce Ontario’s fuel tax from 14.9 cents per litre to 9 cents. This is exactly the right approach.
Ontario drivers currently pay both federal and provincial excise tax, and federal and provincial sales tax, which is applied on top of the excise taxes and the carbon tax.
Ford’s cut would mean today we could be fueling up for $1.27 cents per litre instead of $1.37. This would save Ontario drivers $1.19 Billion every year.
NDP leader, Andrea Horwath, has also pledged action on gas prices, but her plan would not involve much needed reductions.
On May 3, Horwath said that she would, “regulate gas prices so that every week you’re going to know what the price of gas is and you’re going to know that it’s not going to change until a week later on the same day.”
Regulated gasoline prices already exist in the Atlantic provinces where government mandates price maximums and, in some cases, minimums. Like Horwath’s plan, Atlantic price regulation started as a well intentioned idea to reduce price fluctuation and soothe public frustration over high fuel costs.
However, a study by the Atlantic Institute for Market Studies found that, since their inception, regulated gas prices have actually caused consumers to pay more for gas than they would have without the regulation.
In Newfoundland, gas price regulation has resulted in drivers overpaying by $63 million since 2001. Nova Scotians have overpaid by $36 million since 2006. New Brunswickers have overpaid by $15 million since 2006. PEI drivers have overpaid by $91 million since 1991.
Like most planned government intrusion into the functioning of businesses and prices, Horwath’s plan will almost certainly end up costing consumers more. This is especially true given that she will maintain taxes like the cap-and-trade carbon tax.
This brings us lastly to Ontario’s Liberal Party leader and premier, Kathleen Wynne.
Wynne also has a plan for gas prices, but the plan is to make prices higher. The 4.4 cents per litre carbon tax is only the beginning. The cap and trade carbon tax is slated to increase in line with Prime Minister Trudeau’s call for higher carbon taxes.
The price of gas is a huge issue for Ontario families who rely on driving as part of their daily lives. Ford’s commitment to reduce taxes is meaningful and is the one that our other party leaders should adopt as well.
Christine Van Geyn is the Ontario director of the Canadian Taxpayers Federation, Canada’s leading non-partisan citizens’ advocacy group fighting for lower taxes, less waste, and accountable government. This article was previously published in the Toronto Sun.