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Conservatives defend their math on proposed fuel tax holiday

Conservative Leader Pierre Poilievre’s call for a summer gas tax holiday became a topic of heated debate in the House of Commons this week, with the Conservatives and Liberals arguing over how much the proposal would actually save Canadian families.

After the Liberals and some experts questioned how much the Conservative proposal would really save Canadians, the Tories shared their math with CBC News. But academics and at least one gas price analyst are still questioning how realistic those estimates are.

In May, Poilievre said the federal government should give Canadians a break on various federal fuel levies on diesel and gasoline between Victoria Day and Labour Day.

Three federal levies — the federal carbon tax, the excise tax and the GST — apply to these fuels across much of the country but not everywhere.

The Conservative leader says his proposal could save a family as much as $955. On Thursday in the House of Commons, Poilievre said the average savings would be $670.

Conservative leader Pierre Poilievre offers a breakdown on what his summer fuel tax pause would save Canadians. (From https://x.com/PierrePoilievre)
Conservative Leader Pierre Poilievre offers his party’s estimates of what a summer fuel tax pause would save Canadians. (//x.com/PierrePoilievre)

“We’re asking for a tax holiday on fuel. That would save 35 cents a litre and allow families to get in their car, go on the road, do some camping,” Poilievre said.

Later in the day in question period, Liberals mocked the Conservatives’ math.

“This is a prime cut of Conservative baloney,” said Environment Minister Steven Guilbeault. “You can go from the North Pole to the South Pole and you would have kilometres left to achieve the savings that they claim.”

The opposition leader’s director of media relations, Sebastian Skamski, explained how the party arrived at those numbers.

The Conservatives estimate the average family will use 595 litres of fuel over the summer. They say that in a province like Ontario, removing both the GST and excise tax would cost the federal government 18 cents per litre of fuel.

Conservatives are relying on an often-cited report from the Parliamentary Budget Office (PBO) to calculate the impact of removing the carbon tax. Conservatives used the PBO’s net fiscal and economic analysis of the carbon tax to calculate the total savings for households from removing the federal fuel levy, Skamski said. (The PBO report examined all fuels, including home heating fuels — not just gasoline and diesel.)

Several academics who reviewed the Conservatives’ math agreed that their proposal would result in savings for Canadians — but not nearly as much as the party is pitching.

Some of them also crunched the numbers to show how much Canadians would really have to drive to realize the savings Conservatives are suggesting.

Multiple academics note that the PBO report the Conservatives are relying on contained a significant mistake — which may have overstated the cost of the carbon tax.

The PBO said it made an “inadvertent error” by not disclosing it included both the consumer carbon tax and the industrial carbon tax in its analysis.

“This is likely a situation where the federal Conservatives are repeating the PBO error,” said Kent Fellows, an assistant professor of economics with the University of Calgary School of Public Policy and a fellow with the CD Howe Institute.

The Conservatives’ estimates of the savings each family would achieve were released before the PBO’s error came to light.

CBC News asked Conservatives if they still stand by their use of the PBO report.

Skamski cited the PBO’s claim that the error won’t make a huge difference to its estimates when it releases an updated analysis by the fall.

Fellows said he did attempt to replicate the Conservatives’ math without using the PBO’s calculations.

Based on Fellows’ calculations, the average Albertan would have to drive 30,700 kilometres in one summer to realize the savings Conservatives are proposing. He said the average Albertan household drives that much over the course of an entire year.

“I think the numbers are inflated a little bit,” he said.

Another academic agrees with Fellows.

Sara Hastings-Simon — an associate professor at the University of Calgary’s faculty of science who studies carbon pricing — pointed out that the federal carbon tax is rebated to many Canadians. So the actual federal fuel tax Canadians are paying is not as high as the Conservatives are claiming.

The actual net federal tax many Canadians pay on fuel, she said, is around 18 cents per litre because of the rebates.

Crunching the numbers based on that figure, she said someone driving a Ford F-150 in Alberta would need to travel 44,213 kilometres over a summer to achieve those savings. That’s almost six trips across Canada, she said.

“If you look at the average annual mileage that people drive, (the Conservative numbers) are out of whack,” said Hastings-Simon.

Dan McTeague, a former Liberal MP and a vocal opponent of the Liberal government’s carbon tax and other climate policies, said he’s also struggling to understand the Conservatives’ math.

“I am in the wilderness,” McTeague said, describing his attempts to replicate the Conservative numbers without relying on the faulty PBO report.

McTeague conducts gas price calculations as the head of Canadians for Affordable Energy. He estimates that the average Albertan would save about $210 if the government implemented the Conservative summer tax holiday proposal. That’s far less than the $955 the Conservatives are promising for the average Albertan family.

He notes that pausing the collection of GST and excise tax would hurt Ottawa’s bottom line, costing the government billions of dollars. He also warned that rolling out a temporary summer fuel tax holiday would be both popular and tough for any government to reverse.

“You’d be everyone’s friend on the May 24th weekend and everyone’s enemy on Labour Day,” McTeague said. “So choose your poison.”

This article is from from cbc.ca (CBC NEWS CANADA)

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