Gas tax arguments heat up as price increase looms
Drivers filling up in Halifax pay about 44.2 cents a litre in taxes
Premier Stephen McNeil says he plans to approach the federal government about removing Nova Scotia's portion of the harmonized sales tax that is charged on top of the tax that drivers pay for gas.
With gas prices soaring, McNeil said he would like to give consumers a break at the pumps — but warned it won't be easy because it means reopening HST agreements with Ottawa.
McNeil said he'll try to convince the other premiers in the Maritimes to back his position.
"If we can't do it as a group, we'll then look at what is the possibility for the federal government wanting to talk to us about opening it up just for our own province," he told reporters on Thursday.
"When they open up that agreement, I'm sure they'll want to open it up once as opposed to opening it up three different times."
But Progressive Conservative Leader Jamie Baillie said there's no need to delay. He argued the province should, at least, immediately reduce its motive fuel tax by the amount collected in HST.
"The tax on tax has to come off. It has to come off as fast as possible," he told reporters.
"In the meantime, while they sort through all their excuses, at least give Nova Scotians some of that money back the equivalent to what they're paying on the tax on tax so they know they're getting a break."
Baillie called the tax on tax "morally wrong."
What is tax on tax?
Drivers filling up in Halifax currently pay about 44.2 cents a litre in taxes.
The price of regular unleaded gas in the Halifax area is 143.3 cents per litre — that means if drivers didn't have to pay any taxes for gas, the base price would be 99 cents a litre.
Of the 44.2 cents a litre in taxes, 10 cents goes to the federal government and 15.5 cents goes to the province.
Then, another 15 per cent — the harmonized sales tax — is charged to the total amount, which includes the first two government taxes.
Removing the provincial portion of the HST on the gas tax — the so-called tax on tax — would save Nova Scotia drivers about four cents per litre.
'It would be really irresponsible'
But Finance Minister Diana Whalen said she's not ready to cut the provincial portion of the HST on gas because Nova Scotia is in debt.
"It would be really irresponsible to start rebating taxes or changing our tax system in a way that would just put us deeper in a hole," she told reporters.
"We're in a position that is deeply in debt, we have a $279-million deficit in the budget that we're just finishing up debating here in the next couple of days and for that reason alone, it would be a big cost and something that would have to be considered. So we have to time this right."
Whalen said HST savings could only be realized when the government tables a balanced budget, expected within three to four years.
She said she thinks it's a good idea to start discussions on the gas tax now in order to signal where the province wants to go, but she warned any change will take time, given that other governments will likely have to agree.
"We are going to be doing our darndest to do that even faster if we can, but I've got to tell people it's a very big mountain to climb," Whalen said.
With files from The Canadian Press