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Thursday, September 22, 2011

“Tax off tax” explained

I know there’s some confusion out there, so I figured I’d send along a little explanation of the NDP proposal.

Let's say the basic price of gas on the New York exchange was 70 cents a litre. You then add 10 cents federal excise and 16.5 cents provincial road taxes to that. Total here is 96.5 cents a litre, right?


Now we add the HST, which is made up of 8% provincial plus 5% federal taxes (13%)

The problem we found here, and the Canadian taxpayers Association did also, is that the province charges their cut of the HST on the 96.5 cents, which is taxes on the basic cost of gas already.

The NDP proposal would adjust the formula used to just calculate the HST on the base product price of 70 cents, and not the 96.5 cents.

Based on the province estimates of raising 173.3 million in gas taxes this year, the NDP move would bring the total gas tax collected to amount close to $140 million or so, almost back to 2004 levels I think.

Everyone in the province recognizes the need for taxes. It's not dropping any part of the HST or it's gas tax component. It is simply adjusting how the tax is applied, and that makes it more fair for consumers here.

If you live in another province, you might want to check and see how the tax is applied in your jurisdiction.

The Consumer Group for Fair Gas Prices always included the word “Fair” in its title, and it’s only right that the government should be playing fair with consumers too.

Sometimes it’s not all the fault of “Big Oil”. Sometimes a government has culpability in high prices to consumers too.

Hope this helps!

Please pass this on so everyone has a clear understanding!

On a secondary note...

I think everyone here also knows that I am running to be the next Member of the House of Assembly for St. John's East in the October 11th general election. I have had a couple of you dropping emails on where to send a donation, and I'm grateful for your thoughtfulness on this. They are kindly accepted.


George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

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