Replace the gas tax, not abolish it

While the price of fuel has motorists pumped, some politicians would like to send the gas tax to the pound. That would be on the wrong track.

Nevertheless, this tax needs serious adjustment if we don’t want our roads to fall into disrepair one day. We will come back to this later.

First, a word about gasoline, at around $2 a litre, which leaves a big hole in motorists’ wallets… and even in their tanks, which some shameless thieves pierce to seize fuel. What a calamity!

In the conservative camp, politicians did not fail to react to this outbreak at the pump to boost their popularity rating.

Alberta Premier Jason Kenney announced a temporary reduction in the provincial fuel tax, a move that Quebec Conservative Party leader Éric Duhaime would like to emulate.

That would be very ill-advised.

First, a decision should not be made based on fluctuations in the price of fuel, which is highly cyclical. Remember that the price of oil was even negative at the start of the pandemic!

Then, it is not clear that the oil companies would pass on the reduction to consumers, rather than keeping it in their coffers.

And fundamentally, eco-taxation is one of our best levers for combating global warming. A lever that we use very little. Quebec ranks 31^and rank among 35 OECD countries when comparing the weight of environmental taxes on gasoline¹.

Consequence: SUV sales are skyrocketing, which takes Quebec away from its greenhouse gas (GHG) reduction targets. For the moment we have succeeded in reducing our emissions by only 2.7%, while we are aiming for a reduction of 37.5% by 2030, compared to 1990.².

Obviously, we are going into a wall. You have to put the brakes on. And quick.

A track: significantly increase the cost of registration on SUVs so that buyers opt for a smaller, hybrid or electric vehicle.

* * *

Except that the advent of electric vehicles poses another challenge: road maintenance, which is financed by fuel taxes, through the FORT (Land Transport Network Fund).

However, this fund is already in deficit. The more electric vehicles there are on the road, the less money there will be to maintain them.

It is not fair that owners of electric vehicles – often wealthier people who have benefited from subsidies for the purchase – take advantage of the road network for free while leaving the bill to those who drive on gasoline.

No, electric vehicles do not pollute. But they still wear down the infrastructure.

We must therefore consider replacing the tax at the pump with a kilometer tax, an idea that has already been supported by the Board of Trade of Metropolitan Montreal, CAA Quebec and the Conseil du patronat.

It is true that this solution presents technological and political challenges.

Technological: measuring the number of kilometers traveled by installing GPS in cars raises fears of invasion of privacy, while proceeding with an annual reading of the odometer would be prone to fraud.

Politics: in the middle of an election year, a government that has promised not to raise taxes will be reluctant to discuss a kilometer tax, even if it is not a new tax, just a replacement that would not change anything in the taxpayers’ pockets, overall.

Despite the pitfalls, we will have to talk about the kilometer tax. Otherwise, there will be a big hole in Quebec’s budget… and a lot of holes in our roads.