Motor fuel prices in Cascadia keep rising. BC premier Gordon Campbell says to blame Canadian Prime Minister Paul Martin for the bite it’s taking out of British Columbians’ bank accounts.
Fuel prices in Vancouver reached about 95 (Canadian) cents a litre yesterday, approaching the psychologically important dollar-a-litre level. Just so, gasoline prices in the Northwest states have inched toward the $2 a gallon mark. (Yours truly discusses these matters on CBC’s The Current this morning.)
Fuel prices in Canada are generally a fifth to a quarter higher than in the US, because of higher Canadian taxes. In BC, about 40 percent of the purchase price is taxes. In the Northwest states, roughly 20 percent is taxes.
As noted earlier, these prices are up substantially from a year ago, but they’re still low by historical standards if you adjust for inflation. They’re lower still by international standards: Europeans and Japanese pay two to three times as much, because taxes there account for as much as 75 percent of the price.
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The premier’s argument is that, while all provincial fuel taxes pay for roads, federal fuel taxes in Canada go into Ottawa’s general fund. In the US, both state and federal fuel taxes are earmarked for transportation. (Localities chip in property and sales tax money for roadwork, too—a few hundred million dollars a year in the Northwest states.)
Campbell’s presumption seems to be that gasoline taxes should all go into roadwork. That makes sense if you think of fuel taxes as user fees. But it makes little sense if you think of them, as Europeans and Japanese and—perhaps Paul Martin—do, as “sin taxes” like the levies on alcohol and tobacco: taxes that advance social aims while generating public revenue in ways less onerous to the economy than taxes on paychecks or profits.
Still, the politically ritualistic debate on fuel taxes that flares up whenever pump prices rise is a nonsequitur. Fuel taxes haven’t changed. The reasons for higher prices are OPEC’s oil production policies, the weakening American dollar (fuel prices denominated in Euros have hardly budged), tightness in the refining sector, and the steady upward pressure of demand (can you say SUV?). Those are the forces that deserve attention.