Cities’ Infrastructure Gap:
Fill It With Gas Taxes

   
Ottawa - Wednesday, May 22, 2002 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation
 
 

city
problems

The cities agenda has finally captured public attention with a slew of new reports coming forth. Toronto Dominion Bank Economics has recently chimed in with a good effort along with a federal Liberal caucus task force. They join Canada’s big city mayors and the Federation of Canadian Municipalities in trying to highlight the infrastructure deficit prevalent in all of Canada’s urban regions.

 

 

gas
tax

But instead of heeding some of their calls for new taxing powers for municipalities, redirecting federal gasoline taxes — which contributed to Ottawa’s $9.8 billion surplus for 2001/2002 — is a better remedy.

 

 

2.4%
spent
mostly
in Quebec

Gas taxes are a user fee that should be earmarked for road and highway renewal. Provinces generally understand this idea but Ottawa is still user-fee challenged. Of the $4.8 billion collected in federal gas taxes last year, the feds returned a paltry 2.4% ($113 million) back in provincial transfers for roadway spending; 99% of this amount was spent east of Ontario. Even if all infrastructure projects are counted, it is still less than 20% of almost $5 billion collected.

 

 

42% fuel
price
tax

Ottawa’s gas tax rip-off is nothing short of highway robbery. Last year, gasoline taxes accounted for an average of 42% of the pump price paid by motorists. Yet national, regional and city roads and highways are rife with potholes: local mechanics have never had it so good. And Toronto Dominion Bank Economics and the Association of Consulting Engineers both estimate Canada’s roads and highways deficit to be $17 billion.

 

 

more
cash

Canadian municipalities have asked federal and provincial governments for more cash to help fund upgrades to crumbling municipal infrastructure. Cities are the primary engines of economic growth. Without improvements to core infrastructure, they will not realize their full economic potential. Fair enough.

 

 

gas tax
honest
day

But drivable roads are as important in rural Canada as they are in Toronto, Montreal, Calgary or Vancouver. So last week, the Canadian Taxpayers Federation (CTF) launched its 4th annual Gas Tax Honesty Day - a public awareness campaign to cut gas taxes and fix roads.

 

 

fuel
tax
report

With the release of a new report, (complete pdf file) Filling the Infrastructure Gap, the CTF recommends that Ottawa put federal fuel taxes back in the service of municipal roads. It time for Ottawa to “use it” or “lose it” when it comes to gas taxes.

 

 

$2.2
billion

The feds should adopt the Canadian Taxpayers Federation Municipal Roadway Trust program that would dedicate $2.2 billion, almost 50% of federal gasoline tax revenues to municipalities to draw upon for roadway development. Accountability would be maintained with annual reports from cities, vetted by the federal Auditor General. This model provides immediate cash for stretched urban regions and provides federal accountability for spending of federal tax dollars.

 

 

reduce
tax

The federal government should also:
  • reduce gasoline tax rates to levels commensurate with road and highway funding;
  • eliminate the 1.5 cent/litre gasoline tax introduced in 1995 as a deficit fighting measure; and,
  • eliminate the GST charges on the tax component of the pump price.

 

 

road
renewal

This should not be a matter of creating new taxes, but better distributing the taxes that already exist. The Municipal Roadway Trust would make a significant contribution toward meeting the road-renewal needs of municipalities in the 21st century and allow municipalities to free up some of their existing roadway spending for other infrastructure priorities.

 

 

work
togehter

Long before the cities agenda became fashionable, the Canadian Taxpayers Federation was addressing the needs of Canada’s urban regions. Now it would nice if Canada’s big city mayors and the Federation of Canadian Municipalities got on board and endorsed the Municipal Roadway Trust model. There’s no excuse not to since a copy of the Canadian Taxpayers Federation report was hand-delivered to Federation of Canadian Municipalities President Jack Layton’s office in Toronto. Somebody should ask him what he thinks?
   
  Walter Robinson
Federal Director