acton@ubc-cs.UUCP (Donald Acton) (11/18/84)
I haven't heard too much on the topic of oil taxes and VAT from eastern
Canada so I can only assume that winter has set in and all your fingers have
frozen therefore making it impossible for you to type.
If the federal government is considering a VAT then one of the first
questions I ask myself is why? The only reason I can think of is that the
net gain for the government would be more tax revenue. There are two ways
that this gain could come about 1) increased efficiency in the tax collection
process or 2) an increased tax load to the consumer. Being cynical, I find
it hard to believe that reason 1 would be able to generate the types of
revenue the government needs to reduce the deficit. This leads me to believe
that a VAT must result in greater taxation to the consumer, just what we need.
I would also like to point out that in some sectors of the Canadian economy
there already are value added taxes and guess where that is? The answer is
in the pricing of gas at the pumps. Mr Bowler gave us a picture of the utopian
VAT world where only the value added would be taxed, however as he points out
that may not be how politicians choose to implement it. If the politicians
decide to do it in the same manner as is done for gas then we will be in for
one massive tax hike.
Last week I was under the impression that the new oil prices reflected a
move towards world prices. Boy was I wrong. Not one cent of the increased
price goes to oil companies or the producing provinces. All of the money is
destined for the federal coffers and was really an increase of 1.8 cents
per litre in the petroleum compensation tax. (The current price of oil at
the wellhead is $29.75 (Canadian) a barrel but with the federal taxes added
it is $39.28 delivered to a refinery ($1.84 for transport rest taxes). By the
time it is processed, retaxed and sold at the pumps the price is about $41.
Just imagine what the price of oil will be at the pump when the wellhead price
goes to the world price of about $41 (Canadian).)
The federal governments 10% tax is applied after processing but they don't
just apply it to the value added it also applies it to the taxes that have
already been paid at the wellhead. The effect is that the 1.8 cent per litre
is really 1.8 + (1.8 * .1 ) = ~ 2.0 cents. Note the fancy foot work of
announcing a 1.8 cent increase and really collecting a 2.0 cent increase.
Supposedly in Ontario and Quebec the provincial governments impose their own
taxes on gas and these are computed based on a price that includes all the
taxes. Isn't it nice to pay taxes on the taxes. (Just remember that
those of us who aren't lucky enough to live in Alberta also do this every
time we buy something and pay provincial sales tax) All of the taxes mentioned
above (the 10% federal tax and the Ontario and Quebec taxes) are referred to as
value-added levies. Now I will be the first to admit this isn't in keeping
with the definition provided by Mr Bowler but it is what the politicians call
a VAT and to me it is just one big money grab.
It is about time that we quit blaming the producing provinces and oil
companies for high gas prices and started pointing our fingers at the
real culprits, the federal and provincial politicians responsible for the
greedy taxation policies.
Donald Acton