Canadian Automobile Association (CAA)

Canadian Automobile Association (CAA)

August 11, 2005 09:43 ET

CAA Calls for Tax Relief as Gasoline Prices Rise

OTTAWA, ONTARIO--(CCNMatthews - Aug. 11, 2005) - The Canadian Automobile Association (CAA) today asked the Federal Government, in light of the highest prices on record, to commit to tax relief on retail gasoline.

"Canadians are expressing their frustration about the high price of gasoline and the strain it is putting on their family budgets," said David Flewelling, President of CAA. "Now is the time for the Federal Government to take action and offer some form of relief to Canadians, either by lowering taxes or offering another form of rebate on gasoline."

CAA is once again calling on the federal government to charge the GST only on the pre-tax price of gasoline, as well as to offer tax relief when retail gasoline prices rise above $0.85/litre. Increasing gas prices has a disproportionate impact on motorists who are more financially vulnerable, in particular; single- or low-income earners, seniors and small business owners, and rural Canadians and commuters who have few or no transportation alternatives.

On average, federal, provincial and municipal taxes represent 40 to 50 per cent of what Canadians pay at the pumps. The federal government collects the excise tax, which is 10 cents per litre, as well as the Goods and Services Tax, (7 per cent), which is added to the total pump price. As gasoline prices rise, the federal government receives more money from the GST. (In the Atlantic Provinces, the GST is represented as a portion of the Harmonized Sales Tax.) Provincial taxes range from 6.2 cents per litre in the Yukon to 16.5 cents in Newfoundland and Labrador. In some urban centers, such as Vancouver and Montreal, an additional transit tax is levied.
Canadians paid approximately $5 billion in taxes at the pumps last year in federal excise taxes and GST and only 7 per cent was invested back into roads and highways.

CAA offers an informative web site on gasoline prices in Canada. The site gives consumers a resource to learn more about gasoline pricing and taxation, tips on how to reduce their gasoline use, what the CAA is doing on their behalf on this issue and who to contact if they want additional information or to make their voices heard. CAA's gasoline information website link is available on-line at at the national site.

About the Canadian Automobile Association (CAA)

CAA is a federation of 9 automobile clubs serving 4.7 million members through 130 offices across Canada. CAA provides a wide range of member services and works to improve travelling and motoring conditions at home and around the world.

Media Backgrounder: CAA Calls for Tax Relief as Gasoline Prices Rise

Gasoline Pricing and Taxes in Canada

- On average, Canadian taxes represent 40 to 50 per cent of what you
pay at the pumps.

- Federal and provincial governments receive about $10 billion per
year in gasoline taxes. Federal taxes go into general coffers and
help to fund a range of programs. Provincial gasoline taxes are
allocated as determined by each provincial jurisdiction.

- Studies have shown that the fluctuations in gasoline prices are a
result of competition within the market and the cost of the
product. Gasoline prices are also affected by delivery costs, and
supply and demand. Statistically, gasoline prices tend to rise
throughout the summer months because of increased summer travel.

- Several factors create a variance between provincial/territorial
regions in Canada and between cities. The cost of transportation to
individual markets, differences in provincial and municipal taxes,
sales volumes, and the level of competition in a given market can
all effect gasoline pricing.

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