Paving the roads with gas tax:
Paul Martin’s conversion on the road to 24 Sussex Drive

Ottawa - Friday, October 3, 2003 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation


The Canadian Taxpayers Federation prides itself on pushing the public policy envelope by speaking the politically inconvenient truths from balanced budgets to debt reduction to ending bracket creep; it always seems to take a few years for the politicians to get on board.




For half a decade, the Canadian Taxpayers Federation has hosted an annual gas tax honesty campaign just before the May long weekend to blow the whistle on Ottawa’s tax gouging at the pumps and simultaneously highlight the deteriorating state of Canada’s road infrastructure in big cites, small towns and all points in between.



portion of
gas tax

So it was interesting to watch this week’s debate on a Canadian Alliance motion which reads:
“That in the opinion of this House the government should initiate discussions with the provinces and territories to provide municipalities with a portion of the federal gas tax.”

vote on


3% used &
only in Que
& maritimes

The actual vote occurs next Tuesday and early indications point to a majority of Liberal Members of Parlament supporting the motion introduced by Transport Critic, James Moore. Canadian Taxpayers Federation research was front, centre and unquestioned during this debate.

Ottawa collects $4.8 billion in federal fuel and excise taxes annually yet returns less than 3% — a paltry $118 million — to the provinces by way of transfers for roadway development. To make matters worst, 99% of this pittance goes to the four Atlantic Provinces and Quebec. From the western banks of the Ottawa River to the farthest tip of Vancouver Island, five provinces and three territories receive squat, zippo, essentially nothing.



total used

Even if we factor in everything loosely defined as a federal infrastructure contribution — canoe museums, bocce ball courts, Shawinigan fountains, just to name a few — Ottawa has still returned only 10% of almost $45 billion in gas tax collections over the Chrétien decade of federal administration.




Worse still, the former Finance Minister and future Prime Minister, Paul Martin, hiked the federal gas tax from 8.5 cents/litre to 10 cents/litre in 1995 as a measure to help fight the deficit. Over the next two years, this netted an extra $700 million in revenue which helped vanquish the federal deficit. But since this date of balancing the books, this 1.5 cent hike has netted a further $2.8 billion in tax collections which have found their way to the consolidated general revenue fund. This led one opposition Member of Parlament to sarcastically label Mr. Martin as a “general revenue junkie.”




As Finance Minister, Paul Martin was adamantly opposed to returning any portion of the federal gas tax to the cities and motorists from which it is plundered. My how the march to 24 Sussex can focus one’s mind. His as yet unspecified “new deal” for Canadian cities appears to now cede tax room to the provinces which explains why Liberal Members of Parlament will support the opposition gas tax motion, in stark contrast to defeating an almost identical motion this past June. Can there be any doubt left as to who is calling the shots in Ottawa?




However, this well intentioned solution is not ideal as the majority of gas tax revenues will likely be spent on public transit instead of roads and smaller towns and cities will be left out of the funding loop.




A better solution would be to adopt theCanadian Taxpayers Federation’s Municipal Roadway Trust model — which continues to garner editorial acclaim nationwide — and allow cities and towns (big and small) to apply for roadway specific federal funding through an annual $2.2 billion program (5 cents of the gas tax) renewable every three years and overseen with annual reports by the federal auditor general.




Mr. Martin’s legions of policy wonks should to acquaint themselves with this proposal at Canadian Taxpayers Federation’s web site and follow the links through to studies and then the federal section.

Walter Robinson
Federal Director


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