Next Tuesday the Stephen Harper government will bring down its first budget and we will find out if the Prime Minister and his party are true fiscal conservatives. Unfortunately, the country may find out that the current government is just as addicted to tax revenues as their Liberal predecessors were.
as is always the case, in the absence of leaks we will not learn what will be in the budget until it is tabled in the House of Commons. For now, the government is sticking to their game plan that the country will get no tax relief other than the promised reductions in the GST which will see a drop from 7 per cent to 6 after the budget comes down and a further one per cent drop in the future. How fiscally conservative this government is will depend on whether or not there is any adjustment to gasoline taxes. Foreign affairs Minister Peter MacKay hinted that taxpayers may see some tax relief to lower the price of gas, but that possibility has officially been denied. The Conservative Party's position is that Canadians will find relief from the prices at the pump only by the promised GST cut. When Harper was asked about anything that would be done to help out consumers with the extraordinarily high price of gasoline, the PM replied that Canadians "will just have to get used to it".
No one, other than the true socialists among us expect the government to subsidize the cost of gasoline that is determined by the world market. But the taxes that Canada imposes on gasoline result from pure domestic policy and have nothing to do with either the price of tea in China or the price of crude in Iran. If these taxes are left as they are, the Conservative government can hardly be described as fiscally conservative.
We are still paying 1.5 cents a litre that was imposed as a "temporary" surtax in the mid-1990s in order to help reduce the deficit. Years after then Finance Minister Paul Martin, who imposed this tax managed to eliminate the deficit, the 1.5 cent charge on a litre of gasoline remained. No one really expected the tax and spend Liberals to remove it and it remains on the books still. If the current government in Ottawa are truly fiscally conservative and believe that Canadians are overtaxed and deserve to get some of their hard earned money back, that tax will be eliminated next week. If not, it will be clear that this government's view is that tax revenues belong to them and they see no good reason to make a "gift" of it to Canadians.
More troubling is the GST. The term GST is actually a misnomer; it should be referred to as the GSTT because in addition to taxing goods and services we also tax taxes. The GST is applied not just to the basic cost of gasoline but to the total pre-GST price of a litre of gas. The 10 cent a litre federal excise tax and the varying provincial and territorial taxes are also subject to the GST and when the pre-tax price of fuel rises dramatically, as it has recently due to world oil prices, the government reaps a substantial windfall.
When the Tories were in opposition and most notably during the 2004 election campaign, they called for the removal of the GST as it applied to the 10 cent a litre federal tax as well as scrapping the tax in its entirety when the price of gasoline exceeds 85 cents per litre. The present government has scrapped this plan saying that the general reduction of GST is sufficient tax relief. Barring any surprise gas tax relief in next week's budget, it appears that the government wants to keep the excess tax that it reaps when gas prices increase dramatically. If so, the Conservatives will show that they are just as addicted to tax revenue as the Liberals were. and as far as simply reducing the GST, the Liberals were not above making or proposing tax cuts when it suited their purpose.
So far, many of the major decisions that the Conservative government has made have been made decisively and on principle. Stephen Harper did not wait to see what the polls said as Jean Chrétien did; nor did he dither like the hapless Paul Martin did when faced with having to make a decision. The foreign policy decisions that the Tories have made; designating the Tamil Tigers as a terrorist group and cutting off funds to the new terrorist government of the Palestinian authority were made quickly and in accordance with the party's principles. It is hard to believe that a principled government that prides itself on its fiscal conservatism will continue to reap the benefits of rapidly rising fuel prices.
and if they do--well, like Stephen said, we'll just have to get used to it.
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