No. At least, not yet.
Then again, we also should not have scrapped the carbon tax.
There are a few key pillars to my reasoning:
- The government is operating a deficit. And a big one. This helps.
- The world is currently in an energy crisis, and anything which promotes reduced consumption is a good thing.
- Prices in Canada are currently much more favorable than most other places.
- There are other things that the government can do to help. Some of it with that money.
The first point is pretty obvious. Higher gas prices means that the government makes more in tax revenue from oil and gas. At a time of economic uncertainty, when the government is already trying to spend its way out an economic crisis this is actually a bit of good luck. And we shouldn't turn around and piss that money away.
The second point is also kind of obvious. The straight of Hormuz being closed means that there is less oil and gas to go around. We shouldn't be cutting prices to help us pretend that this isn't the case. The higher prices are motivation to use less. Some countries are forcibly cutting the work week down just to reduce demand because they will simply run out of gas otherwise. We are spoiled at the moment that the only barrier to gas is the increased cost.
Which leads into the next point. Yes, prices are higher. But they are also lower than almost everywhere else on Earth right now. Even parts of the US are paying more than we are. That is crazy.
And the last is a lot more relevant. The government is making a lot of extra, unplanned, income at the moment. While some of it should be reserved to reduce the deficits the current administration is running, it wouldn't be amiss to do other things like:
- Pause RTO mandates at the Federal level
- Divert funds to public transit
- Increase payments to low income households
At the end of the day $2 gas is more expensive than it was, but it isn't prohibitively expensive for the average Canadian. This is an EXTREMELY privileged position to be in at the moment.
And simple measures like sending money to the Provinces to help with public transit funding or helping take cars off the roads are much quicker ways to cut costs for average people without giving up every cent earned. And diverting cash directly to those who actually NEED it also helps retain some of the benefit of the windfall.
The fact of the matter is, the government's tax rate is just 5% on top of everything else. Which means at $2/L, it is just $0.10/L in savings. Dropping every single cent of Federal revenue from gas isn't going to make gas magically affordable. It is just going to make it, ever so slightly, less unaffordable while making the government itself significantly poorer.
Yes. Of course the official opposition is pushing for this. They floated the idea first and would get the praise if it got implemented. They would get all the glory for implementing the change and then turn around and roast the government when it inevitably increases our deficit spending.
Put another way, this is a PR move at the cost of the Canadian economy.
Brief note. Current deficit spending is projected at $78.3B. The Federal government averaged $26.3B from 2000-2021 in oil and gas tax revenue, a period over which the average price of gas was about $1/L. The country and demand has grown since, so as the price approaches double that and threatens to go higher, it isn't incredulous to think that leaving the tax in place could eliminate a sizeable chunk of the deficit alone, whereas eliminating the tax entirely could lead to a near doubling of the deficit.
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