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Friday, August 29, 2008

Carbon tax giving Liberals gas pains

As I write this column, families are getting ready for the Labor Day long weekend. Worried by falling housing prices and the dramatic increase in fuel costs since last year, many will be staying close to home.

Prime Minister Harper meanwhile is getting ready to hit the road and is gearing up for a fall federal election. Several of my well placed sources in Ottawa tell me that Harper will soon be pulling the plug on his minority government. If correct then it looks like Canadians will be casting their votes on or around October 15th.

Harper’s decision to go to the polls now probably has more to do with Canada’s softening economy than any sort of political momentum. When the economy takes a turn for the worse incumbent governments tend not to do well in the polls. Thus the official opposition federal Liberals would much rather fight an election sometime next year rather than this Fall.

One weakness federal Liberal Leader Stephan Dion has is his commitment to impose a new federal carbon tax on fuel. Here in B.C. we are already paying an extra 2.5 cents per liter for gas as a result of a provincial carbon tax. Given how unpopular that tax has proven to be with consumers, the federal Conservatives have been busy running attack ads against Dion’s proposed new gas tax.

Except for those British Columbians who are lucky enough to live within walking distance to work, a direct bus route, or a Skytrain station, there simply isn’t an alternative to driving their car. It is also a tax that hits the working poor much harder than the well off.

At the provincial level, for the first time in years the BC NDP has moved ahead of the Campbell Liberal government. Much of that unpopularity has been driven by B.C’s new carbon tax. With gas hovering around at $1.50 per liter the decision to impose this new tax in order to give Premier Campbell a greener image has so far backfired disastrously.

Campbell still has time to correct things. The B.C. government, to its credit, is looking at an industrial carbon emission cap and trade scheme which is a much more effective way to deal with industrial pollution. But until a viable alternative shows up (e.g. plug in gas electric hybrids and pure electric cars) then it is simply unfair to add ever more in the way of taxes to an item which is still years away from having a viable consumer alternative.

Also as consumers we already pay a plethora of gas taxes. Some, like paying for transit infrastructure, are justified. Some, like paying for the acquisition of Petrofina by Petro Canada decades ago, are not.

Voters in British Columbia are making it clear they want a fairer tax regime when it comes to fuel. Those politicians that are listening will do well in the polls, those that do not will do poorly.

Thus at both the federal and provincial an opportunity exists for both the Campbell government in Victoria and the Harper government in Ottawa to review and reduce the amount of taxes we pay for fuel.

Even with a modest reduction in federal and provincial taxes we would still likely be paying over $1.25 per liter for gas. But imagine the boost that 25 cents per liter would give to working poor and middle class families that are struggling to make ends meet and the positive effect it would have on our sagging economy, not to mention Premier Campbell and Prime Minister Harper’s re-election chances.

Michael Geoghegan is a government relations consultant based in Victoria, B.C. He can be contacted via his website at www.mgcltd.ca

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