Big oil companies that the Ontario government said would pass along HST savings to consumers with lower prices would immediately raise prices if governments lower gasoline taxes, Premier Dalton McGuinty said Wednesday.
McGuinty also insisted the HST was not the reason gas prices soared to more than $1.40 a litre in Toronto and to $1.50 in parts of northern Ontario.
"That's not what is driving the prices in Vancouver higher than ours, or the prices in Montreal higher than ours, or American gasoline prices higher than ours," McGuinty told reporters. "What I am very confident of ... is any government that removes any kind of level of taxation from their gasoline find that space is immediately filled in by the gasoline companies."
The Liberal government sold the HST as a way to lower costs for businesses, who were supposed to pass along their tax savings to consumers by lowering prices.
A raft of studies show companies do eventually pass along their HST savings, said Finance Minister Dwight Duncan, who like McGuinty, believes oil companies would hike prices to match any tax reductions.
"It might be that the price would have gone higher had that [HST] not happened," said Duncan. "The price of gas has nothing to do with the tax policies of the government of Ontario."
McGuinty blamed the price hikes at the pumps on international market speculators.
"People are trading in oil and gas the way they trade in other commodities, and the result has driven up our costs here," he said.
The opposition parties called McGuinty's attempts to distance his government from rising gasoline prices and the HST unrealistic.
"How out of touch can you be not to admit that your own eight per cent pile-on in terms of the prices isn't impacting the cost that people are paying at the pumps," asked NDP Leader Andrea Horwath. "It's actually quite ridiculous. There's no doubt that the HST is part of those higher gas prices."
The government rakes in more money every time prices go up at the pumps because of the HST and the 14.7 cents per litre provincial tax on gasoline, said Progressive Conservative critic John Yakabuski.
"The premier can spin the HST yarn any way he wants, but whatever gas prices are today, whatever they may be tomorrow, they are eight per cent higher than they would have been without the imposition of his HST tax grab," said Yakabuski.
McGuinty again rejected the idea of regulating gasoline prices as some other provinces have done, saying it usually leads to higher prices for motorists.
"It turns out that on average those people pay more for their regulated gas prices than we do if we just allow the market prices to go up and down," he said. "In our environment, they go up faster than they do in the regulated environment, but they also come down faster in our environment."
The Canadian Automobile Association predicts the province will pull in an extra $1.53 billion a year in new revenue because of the HST on gasoline and diesel fuel.
The CAA and the Ontario Good Roads Association want a portion of the HST from fuel dedicated to transportation infrastructure and maintenance, and have support from 100 municipalities so far.
"For the last 10 months, drivers in Ontario have been forced to pay more at the pumps because of rising oil prices and the implementation of the controversial HST," said the CAA in a release.