Apr 042012
 

Freedom Party of Ontario

– MEDIA RELEASE –

For Immediate Release

Revenue-Neutral Ontario Budget Tweak Will Shave
10% Off of Price of Gasoline

April 4, 2012 Toronto – With today’s gasoline prices in the range of $1.40/litre, Freedom Party leader Paul McKeever is encouraging Members of the Ontario Legislature to make a revenue-neutral tax tweak that would shave $8.46 off of the price of a 60 litre tank of gasoline. The full particulars are set out in Freedom Party of Ontario’s 2012 Opposition Budget (available here). However, one of the budget proposals in the Freedom budget is that Ontario’s small-revenue consumption taxes be eliminated, and that the revenue from those taxes be completely recouped by raising the HST rate by 2.4 points to 15.4%. A calculation demonstrating the effect of that proposal on the price of gasoline today is set out below.

“Freedom’s 2012 opposition budget provides this government with a pain-free, revenue-neutral way to lower the price of gasoline by approximately 14 cents per litre”, explains Freedom Party of Ontario leader Paul McKeever. “The proposal is one that I think the Liberals, NDP, and PCs could and should support.

“When we choke off transportation with high fuel prices, we choke off economic activity. Reduced economic activity impacts all tax revenues negatively.

“Ontario’s MPPs are in the midst of budget negotiations at a time when the need to address gasoline prices is critical. This is the right time for all parties to support rolling the consumption taxes into the HST. Moreover, it will reduce collection costs and help fight the deficit, because the cost of collecting the HST is borne by the CRA, not by the Ontario Ministry of Revenue”.

Calculation: Lowering Gasoline Prices by
Consolidating Ontario’s Consumption Taxes into the HST

At $1.40 per litre (the approximate price of gasoline in the GTA on April 4, 2012), a 60 litre fill-up costs $84.00.

Of that $84.00, federal excise tax (10 cents/litre) is $6.00, leaving $78.00

The $78.00 represents: (gasoline price + Ontario gasoline tax) + 13% HST thereon.

Therefore, gasoline price + Ontario gasoline tax = $78.00 / 113 * 100 = $69.03

Ontario’s gasoline tax is 14.7 cents per litre. Therefore, on 60 litres, the total Ontario Gasoline tax is: 60 litres x $0.147 = $8.82.

Therefore, the price of 60 litres of gasoline today (before taxes) is: $69.03 – $8.82 = $60.21. The per litre price at the pump: $60.21 / 60 litre = $1.004 per litre.

Were Ontario’s consumption taxes rolled into the HST, as proposed in Freedom Party of Ontario’s 2012 Opposition Budget – i.e., were Ontario to eliminate the other consumption taxes, including the gasoline tax, and to increase the HST by 2.4 points to recoup the revenue lost from the elimination of the other consumption taxes – then the price at the pump today, instead of being $1.40 per litre, would be:

$1.004 x 1.154 (HST) + $0.10 (federal excise tax) = $1.259

In short: gasoline would be approximately 14 cents per litre less expensive, simply by rolling Ontario’s other consumption taxes into the HST. A 60 litre fill-up would cost $75.54 instead of $84.00: a savings of $8.46 on a tank of gas; a savings of $8.46 / $84.00 x 100 = 10%.


For further details, contact:

Paul McKeever, Leader – Freedom Party of Ontario
e-mail: pmckeever@freedomparty.on.ca