N.S. Liberals call for gas tax break
The Nova Scotia government is enjoying an unfair tax windfall as the price of gasoline continues to rise, the Opposition Liberals charged Monday.
Liberal Leader Stephen McNeil said in a statement that provincial data shows the government will collect significantly more gas tax revenue this year than the previous year because of a combination of rising prices and the NDP's decision to increase the harmonized sales tax by two percentage points.
"While Nova Scotians struggle with increasing costs, including the price of gas, the ... NDP are quietly enjoying a windfall thanks to the tax on tax," McNeil said.
Darrell Dexter's NDP government collected an estimated $31 million in gas tax revenue by March of this year — $5 million more than the same period last year, McNeil said, citing data from Service Nova Scotia and the Nova Scotia Utility and Review Board.
McNeil said the government is on track to collect nearly $100 million more than it did in 2009, which is why he is renewing his call to give consumers a break by having the gas tax eliminated.
Steele dismisses 'absurd' numbers
Finance Minister Graham Steele said the Liberals are wrong to suggest the government is getting a tax windfall. "It's absurd," he said in an interview. "I would go so far as to say the numbers are a fantasy."
Steele said the government doesn't produce the kind of numbers McNeil is talking about. More importantly, he said, there is empirical evidence to show that as the price of gas rises, consumers shift their spending and their driving habits to compensate and the net result is no additional tax revenue for the government.
"You cannot act as if consumption stays the same," he said. "As one item in people's budgets gets more expensive, they have less money to spend on other things. So we see reductions in tax revenue from other items, which offsets any increase due to higher gasoline prices."
Steele admitted to making pronouncements similar to the Liberals when he was in opposition, but he said he now knows better, having seen the historical data.
"There's no connection between gasoline prices and tax revenue, and I think the Liberals know this," he said.
The finance minister also said that while the HST revenue from gasoline is up, HST revenue from liquor sales has dropped by almost exactly the same amount, which suggests consumers are shifting their spending habits.