Kerry Diotte, I thought you knew better.

Short economics lesson today as I am through the bulk of Adam Smith's the wealth of nations. (I hope to then have read it 0.999 times more than the average rabid-free-marketeer (i.e. Lorne Gunter). Meaning 1 time)

Kerry Diotte has written another column about Paul Martin's Promise to eliminate the 10 cent per litre federal excise tax on gasoline.

So I did some research and the only information that I found was a pledge by then finance minister Paul Martin that the gasoline tax increase of 1.5 cents per litre was intended as a deficit fighting tax increase. You can check it out for yourself.

http://money.canoe.ca/Columnists/Leatherdale/2005/06/19/pf-1096516.html

So Then I went after the 1995 budget speech and found this quote in the only section that mentions gas or gasoline:

Despite the size of the savings we must secure, this budgetfocuses almost entirely on reducing the spending of government, not increasing taxes for Canadians.
That being said, spending cuts themselves get us very near to our targets. But there is a small gap we must close.
Therefore, we have found it necessary to do four things...

Third, effective midnight tonight, the federal excise tax ongasoline will be increased 1.5 cents per litre raising $500million annually. This will restore total revenues from all federal excise taxes to about their 1993-94 level.

And finally, we are announcing today a temporary tax on thecapital of large deposit-taking institutions, including thebanks. That tax will be in effect until October 31, 1996, andwill raise about $100 million.

The fourth is the only measure mentioned as temporary.

So Paul Martin increased, as finance minister under Jean Chretien, the excise tax on gasoline by 1.5 cents per litre. Yet never in his budget speech does he mention that the excise tax increase is by any means temporary nor does he mention that the increase is conditional on the government's non-deficit position. To be fair he doesn't do this for spending cuts either.

So with Canada still servicing a national mortgage that amounts to 25% of our National Income Paul Martin decides that it might not be a good idea to eliminate a tax that encouages Canadians to use public transit and by energy efficient vehicles. Woo hoo. Good idea.

I will posit that particular bit of masterly inactivity though the subsequent 10 years to have been Paul Martin's greatest achievement. To be sure if Paul Martin were to cut one of my taxes I wouldn't want it to be that on Gasoline. Or even Income. It would be the EI surplus. Why? Because EI acts as a flat tax with a cap at a certain point, which means that beyond that certain point (which I'm too lazy to look up) the more you earn, the less you pay. Therefore, I'd sure like to eliminate that regressive tax that runs at cross purposes to the very progressively scaled income tax.

Now to the economics lesson. The Ad Velorem Tax:

About the time the Federal gas tax increased from 8.5 to 10 cents a litre (I don't recall if the provincial share changed so we'll assume it stayed at nine) I remember that Gas was at 39.9 Giving Kerry the benefit of the doubt, which I am wont to do, otherwise I couldn't be sure he was talking out his gas hole, the Gas tax made up a bit more than 43% of the price of gasoline. The Federal share comprised 21.3%. Today, regular gas was priced at 92.4 cents a litre in Edmonton. The Federal gas tax's share comprises 10.8% Gas tax in total: twenty and one-half percent. Therefore I'd like to castigate Paul Martin for his inaction on the Gas tax. The Tax should be higher to keep the Ad Velorem (Caught your lips moving there Kerry) rate the same. In fact one way that this could be accomplished specially is though the Goods and Services Tax.

That's another thing that has a bee in Kerry's bonnett. The "tax on the tax". You see Kerry believes that taxing a tax, which is often a simpler way to express a compound rate, is in his words now, "immoral". Wow. It's not so much immoral as requiring a grasp of basic arithmatic.

The GST is an Ad Velorem Tax. It taxes at a constant rate. However that rate is either seven percent or zero percent. What would please Kerry I suppose is if we were to zero rate the tax on gasoline while seven rating the rest of the cost of the gas.

My father worked in the point of sale system maintenence and programming business for 26 years, so I asked him what he thought coding that would require. As he said it would be a nightmare and thusly would cost business owners a lot of money to have that work done. Gas station owners by the way don't do that well. They do okay, but many to most owners don't even get a slice of the revenue from the pumps. They rely on the pumps to attract customers who buy coffee, snack foods, and poorly published tabloid dailies, giving the owner his profit.

So what I propose is simple. For the so called sin-taxes, Smokes, booze, and sulfur oxide spewing gasoline, the government introduce a new GST rating. Since the tax has been around for 13 years plus 4 prime ministers and 5 finance ministers let's make it the 22 rate. That's right a 22% ad velorem tax on Booze, Smokes, and Gas to replace these ridiculously arcane systems we have now. Problem solved! The immoral tax is axed and the new moral and higher tax is introduced.

Now to channel Kerry for a line:

That will give those greedy grits some much needed money to throw on the pile.
(Note this is not Kerry, he would more likely sort of growl like frankenstein and shout TAAAAX BAAAAD!)

Back to me:

I don't think the Liberals are greedy. I do think they are incompetent and govern like frightened rabbits, but they aren't greedy, they just aren't bright. Brighter than the official opposition mind you, but that's like beating a three year old in an arm wrestle as you'll note if you've read my blog.

Now Kerry, I'm not the kind of guy to fire off two colums based on information that I couldn't verify and I'll assume that you aren't either, so if you could just contact me with the relavent quote that has Paul explicitly stating that it's his intent to eliminate the tax on Gasoline. I'll go ahead and just say it:

You're an intellectually dishonest man Kerry.

Bad Journalist, no Scoop for You!
Gas Hole.