Who Do High Gas Taxes Hurt the Most?
June 9, 2008 · By Shane Edwards
Remember these statistics:
As would be expected, people earning $80,000 a year or more are cutting back the least (37 per cent) on daily driving and taking fewest steps (36 per cent) to increase gas mileage in cars.
Conversely, more than two-thirds (69 per cent) of drivers earning less than $20,000 a year said they’re cutting back on daily driving, while 64 per cent were trying to increase gas mileage in their cars.
Meanwhile, two-fifths of drivers in the lower middle income range of $20,000 to $40,000 said they’re more frequently turning to other means of travel than their car - the highest among various income groups.
When they start trying to tell you that high gas prices don’t hurt the poor, remember these statistics. When they start saying that only the rich will be hurt because they drive hummers, remember this.
Any action by any party to raise gas prices hurts the poor. Do not let them tell you any different.
There is an important geographical implication to all of this. If you live in Toronto or environs, or Montreal or any other largish centre you have an option in public transit. It might not be convenient or particularly pleasant but if it’s not on strike at least it’s there.
If you live in northern Ontario, Quebec, Saskatchewan or just about anywhere else outside of the cities you have to drive, it really isn’t an option. And ‘Smart cars’ can’t really get the job done in rural Canada in the winter. You have to pay and in most cases the higher cost of driving will be coming out of household incomes that are significantly lower than in the metropolitan centres.
So what’s an increasing inconvenience for us urbanities is actually becoming a serious hardship for a lot of rural dwellers–something that doesn’t even seem to be on the radar screen of the T.O.-centric MSM.
All taxes hurt. However, Canadians are burdened with tons of different taxes as well as tons of deductions.
If the proposed gasoline taxes are mitigated by the reduction of other taxes, the over-all tax burden does not have to hurt as much. In fact, if I ride a bicycle everywhere and live off of fresh fish that I catch in a local stream, a carbon tax met with reduced income taxes might be a good thing for me.
What I find shocking is that the Liberals have not provided much detail.
I do not trust the Liberals one iota because they have not disclosed anything concrete about their future plan. Sorry but they have had a lot of time to present a “carbon strategy” and all they have been able to say is that they are going to increase taxes on gasoline?? Hello??
Charles, I agree with you that this strategy has been FAR too long in coming, which has given the Conservatives way too much time to spin it to their advantage, but can you please source your claim that they have said they will increase taxes on gasoline? If anything, the only thing they have said is that they are NOT going to increase taxes on gasoline.
Correct, that is indeed what they say. Politicians say a lot of things and I am not amused by an accounting loophole that allows him to deny that taxes on gasoline will be touched.
They keep repeating that they will make polluters pay which is nonsense. Restrictions in supply lead to increases in prices. That is like saying a tax on flour is not a tax on bakery products.
You hit the nail on the head, Charles. This is what the Libs are hoping - that we don’t notice the fact that as soon as they slap all kinds of carbon taxes on the Oil and Gas industry, that all of those companies will raise prices to compensate for lost profits from raised cost of production. It may not be a tax but it will surely drive up energy prices across the board.
should we’re all learn to expect that the gas prices will be $5-$10 dollar by the next two year?
Charles, you’re right to point out that any taxing of the production of gasoline will effectively raise the price. I see an important difference, though.
If you just slap a tax on retail sale of gasoline, it will raise the pump price somewhat. The effect would be to discourage gasoline consumption by consumers, but at a great cost of inflation.
If you can tax environmentally unfriendly methods of gasoline production, however, the manufacturers can respond by modifying their production techniques to escape the extra taxes. There exists a financial incentive to modify their production techniques to emit less GHG, for example.
It remains to be seen what the Liberal plan will entail. I’ll reserve judgement until it comes out.
[I think we have had a bit of back and forth on the same topic aforehand. If I recall correctly, I was quite abrasive then! ]
Instead of hypothesizing on the relative impact of placing different taxes at different levels of production, my reply to you is this: without a concrete plan of tax reduction, I see no reason to trust the Liberals on this one. We are looking at a tax-grab that will hurt and I highly doubt it will do one ounce of good for the environment.
“It remains to be seen what the Liberal plan will entail. I’ll reserve judgement until it comes out.”
Why do we have to wait? To be frank, I would trust this matter in your hands more than I would in theirs.
This is truly astonishing. How the Liberals have dropped the ball on this one is puzzling. How difficult must this be for them?
I mean, really. Knock! Knock! Hey, Stephane! Announce income tax reduction!! You really have nothing to lose!
[We did, and I was trying to actively avoid rehashing old arguments. :) I have to admit that my understanding of the effects of taxation has improved somewhat since our last discussion.]
I see no concrete plan of tax reduction, but neither do I see a plan of tax increase. I don’t see a plan at all - and that’s the real problem that we can both agree on. I like the idea in principle (tax undesirable activities, reward desirable activities), but the devil is in the details.
They’ve let the message get out before they were ready to follow up with details, giving their opponents plenty of time to spin it to their advantage. That’s simply poor communication strategy in today’s political environment. With a host of communication technologies at their disposal, they choose - silence. They really have dropped the ball.
To be frank, I would trust this matter in your hands more than I would in theirs.
Thanks. I think. ;)