Scott's Blog

Tax on top of tax? It's the law!

Posted By: Scott Lear · 4/29/2011 2:19:00 PM
It's a government mandated rip off!
 
I wanted to wait till I heard from one particular source on this before I blogged about it.
 
Most of us have been under the impression that we are taxed on top of a tax when it comes to the price at the pump.  If that's you, you are correct!
 
I called MJ Irwin and Associates and asked them about it.  They're the people who provide the stickers on the pumps that try and explain gas prices to us.  They told me that the HST is added to the Federal Excise Tax and the Provincial Gas Tax.  Meaning we pay HST on the 24.7 cents of those combined taxes.
 
The Canadian Taxpayers Federation confirmed this.  I wanted one more source for this.  An extremely credible one.  A source that no government official could deny or spin away from, and I got it.
 
The following is an email from the Canada Revenue Agency.
 
 

Hi Scott

 Further to your enquiry of last week, please find below the response from the Canada Revenue Agency (CRA) regarding how gas taxes are calculated and whether the HST that is applied to gas, is a tax on top of other provincial and excise taxes.

 The federal excise tax, imposed under the Excise Tax Act (ETA), is an indirect tax on motive fuel products. The current rate of excise tax on unleaded gasoline is 10 cents per litre. In general, the excise tax is paid by the company that refined the gasoline and that amount of tax is embedded into the cost of the gasoline sold at a retail gas station.

 The ETA stipulates that certain federal and provincial taxes are to be included in the base price of gasoline before the GST/HST is applied to it.

 These taxes include federal excise taxes imposed by the Act and provincial fuel taxes. Therefore, both of these amounts are included in the base price of gasoline before the GST/HST is applied. Provincial retail sales taxes however are not included in the base price of gasoline before the GST is applied. 

 I trust that this will be sufficient for your story.

 

Thanks,

Rebecca Merrett
Communications manager | Gestionnaire des communications
Ontario Region | Région de l'Ontario
Canada Revenue Agency | Agence du revenu du Canada

11 Station Street |11 rue Station
Belleville, ONK8N 2S3

 

 

In other words it is the law that the HST be applied to the Federal Excise Tax and the Provincial Gas Tax!  Our own government is ripping us off to the tune of 3.2 cents per litre!!!

It may not be much, but it is wrong!

 

I already have an email into Bob Chiarelli on the matter.  I urge you to email your MPP and your MP after the election.  This must change.  it may be a small change but it's a place to start to get gas prices down.

  • Scott Lear

Comments:

  • I've known this for quite some time. It is pathetic; that's why I can't wait for the provincial elections.
    Posted By John On 4/30/2011 8:11:11 AM
  • The last time I tanked up was 44.8l at $1.343 so total was $60.23. $18 of that $60 is taxes! So my gas price was actually only $0.941 and taxes make up $0.401 per litre. Oh and since the HST IS totaled on the tax-in portion the government made an extra $1.44 by taxing taxes. Pretty sick isn't it?
    Posted By Sergio On 4/29/2011 7:26:31 PM
  • Scotty That explains a small portion of the gas price. See bear facebook.
    Posted By Thomas On 4/29/2011 4:38:42 PM
  • Careful... if you hit too close to home you may get brought in for terrorism/national security reasons. ;) Tax on tax is obviously illegal, but I'm sure they have some reasonable explanation all cooked up and ready for us. It will make perfect sense, too. ;)
    Posted By William On 4/29/2011 4:05:41 PM

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