BEAMSVILLE, Ont. – Canadians stung by record-high energy costs shouldn’t look to Ottawa for a gas-tax break as such measures would do little to slash prices at the pumps, Prime Minister Stephen Harper said Wednesday to the chagrin of critics who said there’s plenty of room for government action.
With oil prices having more than doubled over a year ago – surpassing US$133 on commodities markets Wednesday – Harper touted broad-based tax cuts as an antidote and slammed Liberal Leader Stephane Dion’s plan to tax carbon.
“The ability of governments to affect the price of gasoline per se is so small that it’s not worth doing,” Harper said following an announcement on new food labelling regulations.
“What you’ve really got to do is lower costs for consumers generally, rather than try to fight the upward trend in the price of gasoline.”
Overall tax cuts, like the two percentage points his government has taken off the GST, are the best way to bring savings to consumers, Harper added.
“What we don’t need right now in the face of rising gasoline taxes and rising taxes on energy products are governments that come in and specifically impose carbon taxes on our economy,” he said.
“We think that is a foolish and unnecessary policy being proposed by our opposition.”
A carbon tax proposal is to be the central plank in the Liberals’ election platform. Dion is expected to unveil the plan before the end of June and then spend the summer trying to explain it to Canadians.
The implementation of a carbon tax would be more about raising revenue than helping the environment, Harper said.
“If what you really want to do is get money for the government and claim that you’re trying to reduce emissions, then you impose carbon taxes.”
Gas prices at the pump and other energy prices were the big impetus behind April inflation, which rose to an annual 1.7 per cent.
Pump prices have risen 11.6 per cent from last April, while fuel oil and other fuels surged 36.9 per cent, the fastest increase since September 2005. Taking gasoline prices out of the calculation, the inflation rate would have been 1.3 per cent in April.
Given that provincial and federal taxes make up almost one-third of the price of gas, it’s a myth to say governments can do nothing about the pump price, said John Williamson of the Canadian Taxpayers Federation.
“The government has a great deal to do with rising gas prices; 28 per cent of pump price is tax,” he said.
“If governments were to act, either in solo or in concert, prices would come down.”
The GST cut, Williamson added, doesn’t really affect the price of gas.
But Chisholm Pothier, Finance Minister Jim Flaherty’s press secretary, said the GST cut has in fact “given Canadians a break at the gas pumps.”
“It lowers the price of gas every time a Canadian fills up their tank,” he said.
Toronto-area Liberal MP Dan McTeague said he also doesn’t buy Harper’s argument, and he noted that with fuel prices in their current range, Ottawa stands to add a substantial amount of cash to its coffers.
If prices keep rising unchecked, it could bring the Canadian economy “to its knees,” said McTeague, a longtime gasoline price watchdog.
“It’s already having a troubling, damaging impact on the manufacturing sectors of this country,” he said.
Despite record-high oil costs, prices at the pump – while painfully high – have not yet risen in tandem.
McTeague predicted that disparity would come to an end as early as Thursday as gas and diesel prices begin to rise.
Harper also made stops Wednesday in several southern Ontario communities and held an hour-long roundtable discussion with town residents in Thorold, where he heard their views on the struggling economy, disappearing jobs and other local issues.
Ralph Journeay, who is self-employed and runs his own auto parts business, said he was impressed that Harper took the time to listen to their concerns, and he supported the prime minister’s GST cuts.
He said he couldn’t fault Harper for saying he was powerless to control gas prices.
“Our hands are tied. I wish we could (lower prices) but I don’t know that we can,” Journeay said.
“But that two per cent on the GST, that’s helping, and hopefully in time we can get rid of all it, get rid of the other five per cent. That would be great.”
