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Conservatives defend calls for the proposed fuel tax holiday.

Conservatives defend calls for the proposed fuel tax holiday.

By Mounira Magdy

Published: June 1, 2024

Conservative leader Pierre Poilievre's call for a summer gas tax holiday has become a hot topic of debate in the House of Commons this week, as Conservatives and Liberals argue over how effective the proposal would be in actually helping Canadian families.

After Liberals and some experts questioned how much the Conservative proposal could help Canadians, the Conservatives shared their calculations with CBC News. However, academics and at least one gas price analyst are still questioning the realism of these estimates.

In May, Poilievre said the federal government should provide Canadians with relief from various federal fuel charges on diesel and gasoline between Victoria Day and Labour Day.

Three federal taxes—the federal carbon tax, the excise tax, and the Goods and Services Tax—apply to these types of fuels in most parts of the country but not everywhere.

The Conservative leader claimed his proposal could save families up to $955. Poilievre added on Thursday in the House of Commons that the average savings would be $670.

Poilievre added, "We are calling for a fuel tax exemption, which would save 35 cents per liter and allow families to get in their cars, hit the road, and do some camping."

Later that same day during question period, Liberals mocked the Conservative calculations.

Environment Minister Steven Guilbeault stated, "This is a core part of Conservative nonsense. You could go from the North Pole to the South Pole and you would still have kilometers left to achieve the savings they are claiming."

Opposition leader's communications director, Sebastian Skamski, explained how the party arrived at these figures.

The Conservatives estimate that the average household will use 595 liters of fuel over the summer. They say that in a province like Ontario, removing both the Goods and Services Tax and the excise tax would cost the federal government 18 cents per liter of fuel.

The Conservatives are relying on a frequently cited report from the Parliamentary Budget Officer (PBO) to calculate the impact of removing the carbon tax. Skamski said the Conservatives used the net financial and economic analysis of the carbon tax from the budget office to calculate the total savings for families from the elimination of the federal fuel tax. (The PBO report examined all types of fuels, including home heating fuel—not just gasoline and diesel).

Many academics who reviewed the Conservative calculations agreed that their proposal would lead to savings for Canadians—but not to the extent the party claims.

Some also analyzed the numbers to show how much Canadians would have to do to achieve the savings proposed by the Conservatives.

Several academics noted that the PBO report relied upon by the Conservatives contains a major error—it may have overstated the cost of the carbon tax.

The budget office stated it made an "unintentional error" by not disclosing that it included both the consumer carbon tax and the industrial carbon tax in its analysis.

Kent Fellows, an assistant professor of economics at the University of Calgary’s School of Public Policy and a fellow at the C.D. Howe Institute, said, "This is likely a situation where federal Conservatives are repeating the mistake of the budget office."

The Conservatives' estimates of savings for households were released before the budget office's error became known.

CBC News asked the Conservatives if they were still holding on to their use of the PBO report.

Skamski cited the PBO's assertion that the error will not make a significant difference in its estimates when it releases an updated analysis by fall.

Some colleagues said they had already tried to replicate the Conservative calculations without using the budget office's calculations.

Based on Fellows' calculations, the average citizen in Alberta would need to drive 30,700 kilometers in one summer to achieve the savings proposed by the Conservatives. He noted that the average household in Alberta drives that much over an entire year.

He added, "I think the numbers are a bit exaggerated."

Another academic echoed the colleagues’ sentiment.

Sarah Hastings-Simon, an associate professor in the Department of Physics at the University of Calgary, who studies carbon pricing, noted that the federal carbon tax is discounted by many Canadians. Therefore, the actual federal fuel tax that Canadians pay is not as high as the Conservatives claim.

She stated that the net actual federal tax paid by many Canadians on fuel is about 18 cents per liter due to rebates.

Analyzing the numbers based on this figure, she said that someone driving a Ford F-150 in Alberta would need to travel 44,213 kilometers over the summer to achieve that saving. She noted that this equates to nearly six trips across Canada.

Hastings-Simon said, "If you look at the average annual kilometers people drive, (the Conservative numbers) are incorrect."

Dan McTeague, a former Liberal MP and a strong opponent of the carbon tax imposed by the Liberal government and other climate policies, stated he also struggles to understand the Conservative calculations.

McTeague noted, "I'm in the wild," describing his attempts to replicate the Conservative numbers without relying on the flawed budget office report.

McTeague conducts gas price calculations in his role as president of Canadians for Affordable Energy. He estimates that the average citizen in Alberta would save about $210 if the government implemented the Conservatives' proposal for a summer tax holiday. This is much less than the $955 that the Conservatives promised for the average Alberta family.

He points out that pausing the collection of the Goods and Services Tax and the excise taxes would negatively impact Ottawa's bottom line, costing the government billions. He also warned that introducing a temporary fuel tax holiday in the summer would be politically popular but difficult for any government to backtrack on.

McTeague said, "You’ll be everyone’s friend on the long weekend of May 24 and everyone’s enemy on Labour Day. So choose your poison."

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