FULL GASOLINE TAX OF $0.13 PER LITRE COULD SOON RETURN
While inflation remains high, there is no justification for hikes that will worsen it
On Saturday, the UCP will reimpose 4.5 cents per litre of gasoline tax. That's bad enough when people are struggling with inflation.
But very soon, Albertans could find themselves paying the entire 13 cents per litre tax once again, just as pump prices are rising.
Some Calgary stations were charging nearly $1.60 per litre on Wednesday.
The tax break was tied to West Texas Intermediate (WTI) crude oil prices, not gasoline costs, when it was announced in the spring.
“This relief is based on a sliding scale for the price of oil,” Premier Jason Kenney said then. “When the price of oil is over (US)$90 per barrel, the fuel tax will be removed completely. When the price of oil is less than $80 per barrel of WTI, the fuel tax of 13 cents per litre will be in full effect.”
The WTI price touched US$76 earlier this week. It has since recovered to above US$80. But the price is down more than 20 per cent since the tax relief was announced.
Kenney and Finance Minister Jason Nixon slapped 4.5 cents of tax back on when the four-week average crude price dipped less than a dollar below US$90.
There's no sign they'll be any less eager to restore the whole 13 cents if crude falls under US$80.
The UCP government is worried more about provincial finances than yours. With the full tax break of 13 cents, the treasury was losing more than $100 million per month.
When the program took effect April 1, extremely high crude prices above US$100 brought in more than enough revenue to cover the tax loss.
Gasoline prices rise and fall with crude over time, but it's not always a direct or immediate link.
Today's suddenly higher pump prices are due to refinery problems in the U.S. Retailers have also taken very high margins. It hasn't always been clear that they were passing on the full tax break to consumers.
Meanwhile, general inflation continues at seven per cent.
One of the first things the next premier should do is cancel the 4.5 cent increase set for Oct. 1, suspend plans to impose the full 13 cents per litre based on crude prices, and take serious steps to ensure that motorists, not gasoline sellers, get the full benefit.
There's no justification for a tax increase of any kind until inflation drops several points into a relatively normal range. Tax increases add to inflation.
The 4.5 cent tax is just one of several hot potatoes the government has lobbed into the UCP leadership race.
The candidates expected Kenney and his tight governing crew to be relatively dormant. Instead, they're aggressively activist. Every day the candidates wonder what's coming next.
The decision to reindex income tax, I'm told, was taken without consultation in the UCP caucus. So was the decision to not reindex AISH and other social payments.
All seven candidates were shocked at that and called for reindexing of social benefits along with income tax. The move made the government they all hope to lead look heartless.
Kenney also continues to push hard toward a provincial police force. This makes some of the candidates happy, others uncomfortable. Many city dwellers see little reason for a provincial force since their own local police forces would remain. In rural areas, there's a lot of general support for a provincial force, but almost none among local politicians who foresee huge costs and organizational problems.
This week, Justice Minister Tyler Shandro startled the candidates yet again by alleging that the federal government will “conscript” RCMP officers to confiscate guns that will be illegal under new federal law.
Response from the candidates was mostly supportive of Shandro. They know gun rights are an emotional, hot-button issue with many voting UCP members.
But they will be glad when the government speaks with a single voice, and it's not Jason Kenney's.