Gas tax hike recommended to fund Big Move

(Updated) If a government appointed panel’s recommendations are acted upon, the price at the pump could go up a lot. In a report out Thursday, a panel is calling for a province-wide hike in gas taxes to help pay for transit expansion in the Greater Toronto Hamilton Area. If approved, you could be paying up to 10 cents more per litre in taxes within the next decade.

The panel says the tax increase would help bring in 800-million dollars a year to improve public transit in the GTHA. But the opposition parties say people in Ontario can’t afford more taxes.

The transit panel appointed by Premier Kathleen Wynne earlier this year gave two options for funding public transit in the GTHA.

The first suggests a 3 cent per litre increase in gas and fuel tax in 2015 with a 1 cent increase each year after until drivers are paying 10 cents more per litre in tax. The same year, the corporate income tax rate would increase by 0.5 percent.

In option B, gas tax would still increase by 3 cents per litre in 2015 but the yearly increase after would be capped at 5 cents per litre. to make up for it, the panel is recommending increasing the harmonized sales tax by 0.5 percent in 2018.

While the panel was charged with finding ways to fund transit infrastructure within the GTHA, the tax increases would be province wide. But the panel says regions outside the GTHA won’t be subsidizing those projects. They’ll get to decide where their extra tax dollars go.

Not surprisingly, Thursday’s recommendations sparked heated debate during question period.

PC Leader Tim Hudak: “Now the Golden panel is effectively a study of a study of a study. So this is your final decision right? This is the final call? Your plan is to increase gas taxes by 5 cents a litre. Your not just kicking this down the road for another study?”

Premier Kathleen Wynne: “If we abdicate this responsibility now, and we do not make investments in transit, future generations will look back and say what were you thinking why were you not making the investments we needed in order for this to happen.”

Ontario NDP Leader Andrea Horwath says her party does not support a gas tax or hst increase: “Everywhere I go in Ontario, people are telling me they simply can not make ends meet. So anything that digs into their pockets and makes life more difficult for them is a non-starter for New Democrats.”

Finance Minister Charles Sousa says the Liberals have yet to decide if they’ll adopt the panels recommendations: “What we have said, is that we’re making investments. We are taking into account the budgeting forecast necessary to accommodate those, and we have instituted a number of measures to move forward on our transit strategy.”

The panel’s report says the gas tax increase would cost the average household in the GTHA about 80 dollars in the first year and 260 dollars after eight years. But it also notes that sitting in traffic 32 minutes a day can cost a driver more than 700 dollars annually.