National
Canadians pay dearly in gas taxes – it’s only going to get worse
From the Canadian Taxpayers Federation
Author: Jay Goldberg
Two thousand dollars. That’s how much the typical two-car family spends on gas taxes every year.
Big numbers can sometimes be hard to process. But the feeling of dread Canadians get as the gas metre ticks up sure isn’t.
Go to the gas station and you’ll see moms filling up the minivan before soccer practice, praying the metre doesn’t tick past $100 so she can afford to take the kids to McDonald’s after an hour of drills.
Or dads fueling up after a week of long commutes to the office, who might choose to only fill the tank halfway in order to have enough money left over to pick up groceries on the way home for Friday night dinner.
All too often, folks will throw up their hands when they see the gas bill, not knowing who to blame. But the truth is a lot of the fault for high gas prices lies at the feet of our politicians.
The average price of gas in Ontario late last month was $1.66 per litre. Out of that total per litre cost, a whopping 56 cents was taxes.
That means that more than a third of the price of gas is taxes, money going out of the pockets of hardworking families and into the coffers of big government.
A family filling up a Dodge Caravan and Honda Accord once every two weeks ends up paying just shy of two grand in gas taxes over the course of a year.
That’s the equivalent of two months’ worth of groceries for a family of four.
Yes, gas taxes have been around for decades. But politicians today, particularly those in Ottawa, keep driving the tax burden higher and higher.
The Trudeau government’s carbon tax now costs 17.6 cents per litre. For that family filling up the Caravan and Accord once every two weeks, over the course of a year, the carbon tax bill alone will reach $604.
And it’s a cost that wasn’t charged at the pump just six short years ago.
If a 56 cent per litre tax bill sounds bad to you now, just wait until you see what Prime Minister Justin Trudeau has in store for Canadians.
Trudeau plans to keep raising his carbon tax each and every year until 2030.
Today, the carbon tax costs 17.6 cents per litre of gas at the pumps. In six years, with Trudeau’s two carbon taxes fully implemented (the second one coming through fuel regulations), that number will be 54.4 cents per litre.
And that will bring the total per litre tax bill to $1.04.
By 2030, that same family filling up the Caravan and Accord every other week will be paying over $1,800 in carbon taxes. And the cost of overall gas taxes per year will hit $3,570.
This is a future Canadians can’t afford. And the federal carbon tax is making that future unaffordable.
The Trudeau government has tried to argue that somehow, by charging a carbon tax, paying bureaucrats to collect the carbon tax, charging sales tax on top of that carbon tax, and then using a magic formula to send some of that money back to taxpayers, Canadians will be better off.
Anyone who buys that should be looking for a beachfront property in Saskatoon.
And there are no refunds for Trudeau’s second carbon tax.
For those wondering, there are politicians out there willing to cut fuel taxes to make life more affordable at the pumps.
Provincial governments of all stripes, from the Liberals in Newfoundland and Labrador to the Progressive Conservatives here in Ontario to the NDP in Manitoba, have cut fuel taxes, saving families hundreds of dollars.
Trudeau’s scheduled carbon tax hikes over the next six years will crush family budgets like an asteroid wiping out the dinosaurs. It’s time for the feds to learn from the provinces and lower costs at the pumps.
That means putting scrapping the carbon tax at the top of the agenda.
Business
Canada’s chief actuary fails to estimate Alberta’s share of CPP assets
From the Fraser Institute
By Tegan Hill
Each Albertan would save up to $2,850 in 2027—the first year of the hypothetical Alberta plan—while retaining the same benefits as the CPP. Meanwhile, the basic CPP contribution rate for the rest of Canada would increase to 10.36 per cent.
Despite a new report from Canada’s chief actuary about Alberta’s potential plan to leave the Canada Pension Plan (CPP) and start its own separate provincial pension plan, Albertans still don’t have an official estimate from Ottawa about Alberta’s share of CPP assets.
The actuary analyzed how the division of assets might be calculated, but did not provide specific numbers.
Yet according to a report commissioned by the Smith government and released last year, Alberta’s share of CPP assets totalled an estimated $334 billion—more than half the value of total CPP assets. Based on that number, if Alberta left the CPP, Albertans would pay a contribution rate of 5.91 per cent for a new CPP-like provincial program (a significant reduction from the current 9.9 per cent CPP rate deducted from their paycheques). As a result, each Albertan would save up to $2,850 in 2027—the first year of the hypothetical Alberta plan—while retaining the same benefits as the CPP. Meanwhile, the basic CPP contribution rate for the rest of Canada would increase to 10.36 per cent.
Why would Albertans pay less under a provincial plan?
Because Alberta has a comparatively younger population (i.e. more workers vs. retirees), higher average incomes and higher levels of employment (i.e. higher level of premiums paid into the fund). As such, Albertans collectively pay significantly more into the CPP than retirees in Alberta receive in benefits. Simply put, under a provincial plan, Albertans would pay less and receive the same benefits.
Some critics, however, dispute the estimated share of Alberta’s CPP assets (again, $334 billion—more than half the value of total CPP assets) in the Smith government’s report, and claim the estimate understates the report’s contribution rate for a new Alberta pension plan and overestimates the new CPP rate without Alberta.
Which takes us back to the new report from Canada’s chief actuary, which was supposed to provide its own estimate of Alberta’s share of the assets. Unfortunately, it did not.
But there are other rate estimates out there, based on various assumptions. According to a 2019 analysis published by the Fraser Institute, the contribution rate for a new separate CPP-like program in Alberta could be as low as 5.85 per cent, while AIMCo’s 2019 estimate was 7.21 per cent (and possibly as low as 6.85 per cent). And University of Calgary economist Trevor Tombe has pegged Alberta’s hypothetical rate at 8.2 per cent.
While the actuary in Ottawa failed to provide any numbers, one thing’s for certain—according to the available estimates, Albertans would pay a lower contribution rate in a separate provincial pension plan while CPP contributions for the rest of Canada (excluding Quebec) would likely increase.
Business
For the record—former finance minister did not keep Canada’s ‘fiscal powder dry’
From the Fraser Institute
By Ben Eisen
In case you haven’t heard, Chrystia Freeland resigned from cabinet on Monday. Reportedly, the straw that broke the camel’s back was Prime Minister Trudeau’s plan to send all Canadians earning up to $150,000 a onetime $250 tax “rebate.” In her resignation letter, Freeland seemingly took aim at this ill-advised waste of money by noting “costly political gimmicks.” She could not have been more right, as my colleagues and I have written here, here and elsewhere.
Indeed, Freeland was right to excoriate the government for a onetime rebate cheque that would do nothing to help Canada’s long-term economic growth prospects, but her reasoning was curious given her record in office. She wrote that such gimmicks were unwise because Canada must keep its “fiscal powder dry” given the possibility of trade disputes with the United States.
Again, to a large extent Freeland’s logic is sound. Emergencies come up from time to time, and governments should be particularly frugal with public dollars during non-emergency periods so money is available when hard times come.
For example, the federal government’s generally restrained approach to spending during the 1990s and 2000s was an important reason Canada went into the pandemic with its books in better shape than most other countries. This is an example of how keeping “fiscal powder dry” can help a government be ready when emergencies strike.
However, much of the sentiment in Freeland’s resignation letter does not match her record as finance minister.
Of course, during the pandemic and its immediate aftermath, it’s understandable that the federal government ran large deficits. However, several years have now past and the Trudeau government has run large continuous deficits. This year, the government forecasts a $48.3 billion deficit, which is larger than the $40 billion target the government had previously set.
A finance minister committed to keeping Canada’s fiscal powder dry would have pushed for balanced budgets so Ottawa could start shrinking the massive debt burden accumulated during COVID. Instead, deficits persisted and debt has continued to climb. As a result, federal debt may spike beyond levels reached during the pandemic if another emergency strikes.
Minister Freeland’s reported decision to oppose the planned $250 onetime tax rebates is commendable. But we should be cautious not to rewrite history. Despite Freeland’s stated desire to keep Canada’s “fiscal powder dry,” this was not the story of her tenure as finance minister. Instead, the story is one of continuous deficits and growing debt, which have hurt Canada’s capacity to withstand the next fiscal emergency whenever it does arrive.
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