Enjoy Doug Ford’s cheaper gas while you can. It comes at a high cost

Posted on July 7, 2022 in Governance Policy Context

Source: — Authors:

TheStar.com – Opinion/Political Opinion
July 6, 2022.  

Doug Ford’s gas-tax cut is a phoney discount that counts for little because it never added up, but we will all pay the cost for lowering gas prices as of July 1, Martin Regg Cohn writes.

Enjoy Doug Ford’s gas tax holiday while it lasts — for all of six months.

Just don’t be deluded by the illusion of the 5.7-cent solution. It’s a phoney discount that counts for little because it never added up, but we will all pay the cost for lowering gas prices as of July 1.

You can’t promise to rebuild a cash-starved health care system while squeezing government revenues. You can’t pledge to build out long-term care and expand child care while cutting gas taxes.

You can’t vow to build Highway 413 and the Bradford Bypass, as Ford’s Tories did on the campaign trail, without anyone paying the bills.

Ah, but you can, thanks to the magic of politics: It’s called the power of suggestion in an election — two elections, in fact.

You might think the idea for tax relief at the pump emanated from the latest surge in prices caused by war in Ukraine. That would be political amnesia.

In fact, Ford first made the promise during the 2018 campaign, long before Russia’s invasion and subsequent economic aftershocks. He knew how to buy votes by pressing people’s buttons.

In full rhetorical flight, the soon-to-be premier proffered a 10-cent-a-litre gas tax cut. It turned out to be a promise in two parts — starting by trimming the tax by only 4.3 cents a litre at the outset.

Promise made, promise only partly kept. It took another four years, and a re-election campaign, for Ford to follow through with a further 5.7 cents this month.

To be clear, it wasn’t relief from the Russian disruption. This was a solution in search of a problem, and a promise in search of a pretext.

It was inspired by political psychology, not economic reality. After decades of oil price shocks, the volatility at the pump has rendered price relief almost irrelevant.

A quick look at gasbuddy.com shows how Ford’s planning is panning out:

Last month, the average price for regular gas in Ontario peaked at a whopping $2.10 a litre. And then, miracle of miracles, prices fell below the psychological toonie barrier to $1.99.

Do we owe the premier a debt of gratitude for this welcome relief? No, the drop of 11 cents a litre preceded by several days Ford’s much-hyped tax cut (which, you’ll recall, was a mere 5.7 cents anyway) and was due entirely to outside economic and geo-political factors beyond his control.

True, on July 1, the pump price dropped just over five cents more, on average, across Ontario — in line with the government’s 5.7-cent tax cut. And then, miracle of miracles, it kept declining by a further eight cents for reasons utterly unrelated to Ford’s intervention, bottoming out at about $1.87 a litre by Tuesday of this week.

You get the picture. Ford’s tax cut is a drop in the bucket amid the wild price swings in an unsettled global oil market. The idea that his PC government is making a difference in personal survival, or corporate decision-making, doesn’t make sense when the 5.7 cents is far exceeded by price volatility from week to week.

Put another way, this week’s average pump price after the tax holiday is still much higher than when Ford re-announced the scheme three months ago, on the eve of his 2022 re-election campaign. Back then, in early April, gas cost about $1.62 a litre, yet today it costs about 25 cents more.

What’s the point of tax relief so fleeting and imperceptible that you only notice it for a day at the pump, before it is overtaken by daily volatility in global oil markets? How do you defend bleeding the treasury of money that’s needed more than ever for services people truly need?

The gas tax brought in $2.3 billion in the last fiscal year. The six-month holiday will cost $645 million, on top of the forgone revenue from the previous tax cut — even more if Ford, as is his wont, makes it permanent when it expires Dec. 31.

At some point we will have to make up the difference, and the shell game will have run its course. Until then, Ford’s Tories will remain obsessed with lowering disincentives to driving — cutting the fuel tax, rebating licence plate fees, building roads and removing tolls — when governments around the world are incentivizing people to drive less.

In his 2018 campaign, Ford falsely claimed he would eliminate the “carbon tax” in Ontario, when in fact no such tax existed. He did, however, dismantle the pre-existing “cap and trade” system at great cost to the treasury, which automatically triggered a federal carbon levy for the first time — resulting in drivers paying an additional 4.4 cents a litre as of April 1, 2019.

Back then, Ford and his entire cabinet tweeted dire warnings to motorists that they’d best fill up their tanks to avoid being hit by a “job-killing carbon tax.” Once again it proved to be a false alarm — prices actually went down, not up, in subsequent weeks (as did the unemployment rate).

The premier’s penchant for playing with fuel taxes might seem like fun with numbers, but it comes at the expense of serious help for those who need it most. The problem with Ford’s vote-buying is that we can ill-afford the toll it takes on an ailing health care system.


Tags: , , ,

This entry was posted on Thursday, July 7th, 2022 at 3:41 pm and is filed under Governance Policy Context. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Leave a Reply