Published as op-ed in Winnipeg Free Press
February 17, 2012
By: Peter Miller

Municipal officials agree there is a huge infrastructure deficit and a recent survey indicates a majority of Manitobans backs a dedicated infrastructure tax to pay for it. (Manitobans back infrastructure tax, Free Press, Jan. 28). But should that tax be an addition to the sales tax, as the Association of Manitoba Municipalities advocates?

I think not.

A more equitable and sustainable alternative is to increase the fuel tax. Why? Because motor vehicles are a primary cause of increasing infrastructure costs, yet they pay an ever-declining portion of the costs they impose. This imbalance starves public resources that could meet other vital needs.

Consider Winnipeg city council’s spur-of-the-moment decision to add an extra 20 cents to the 2012 bus fares. Besides being hasty and uninformed, the increase inequitably targeted bus users in a year in which the road budget grew by 34 per cent. No comparable revenue increase was sought from motor vehicle owners, whose mobility depends on roads. Fees for city services, for recreation, for sewer and water, for transit, and for garbage collection rise to meet incremental spending or inflation. But motor vehicles, which demand an increasingly expensive network of roads and bridges, are sacrosanct — untouchable as a source of revenue to meet their growing costs. Instead we hear a despairing lament about an “infrastructure deficit” and calls for a bigger share of sales tax, but not on fuel.

Here are the facts:

The present Manitoba fuel tax of 11.5 cents per litre has remained unchanged since 1993, through two decades of inflation, and yields less than half the cost of the province’s investments in roads and bridges. General revenues such as income and sales taxes make up the difference. Municipal investments in roads and bridges are additional and paid largely from property taxes. Both levels of government face further costs from motor vehicles, including medical care for accident victims and policing. Over a third of Manitoba’s GHG emissions arise from the transportation sector. Yet vehicle owners are not charged the costs of extreme events attributable to climate change. Instead victims and governments pick up the bill.

Unlike many other jurisdictions, Manitoba exempts fuel from the provincial sales tax. Hence the general taxpayer faces a double whammy both subsidizing motor vehicle usage and picking up this economic sector’s share of the tax burden in support of health, education and government services. Of course, we all depend on motor vehicles, but differentially. The net effect is we live in a more costly society than necessary and those who choose the most efficient and sustainable transportation modes subsidize those who don’t.

The average Canadian pays 11 cents per litre more than Manitobans in gasoline taxes, i.e. 37.9 cents versus 26.9 cents per litre. Bringing fuel taxes in line with the rest of the country would add $150 million to $200 million per year to infrastructure budgets. Based on extensive consultation, 2020 — Manitoba Transportation Vision reports, “Manitobans suggested an increase to fuel tax, on the condition that such fuel taxes are directed into a fund specifically dedicated for transportation-infrastructure renewal.” Yet the NDP government chose to impose an ever-increasing burden on other revenue sources rather than accept the recommendation to raise fuel taxes to meet infrastructure costs.

Vastly underpricing the cost of motor vehicle operations by freezing the fuel tax is a massive perverse subsidy that undercuts recommendations for greater fuel efficiency and reduced driving from the Vehicle Standards Advisory Board. The VSAB observes Manitobans’ total annual vehicle kilometres travelled increased by 27 per cent from 2000 to 2007 when the national increase was only 6.5 per cent. We all benefit from motor vehicles, but providing huge subsidies from the public purse distorts their true costs, encouraging less sustainable and efficient transportation choices, and starves the resources available for other public investments. Until motor vehicles pay their fair share of societal costs, particularly the costs they impose, an increase to the sales tax to make up the shortfall is unwarranted.

Peter Milller, a retired University of Winnipeg philosophy professor, is chairman of the Green Action Centre policy committee.

Republished from the Winnipeg Free Press print edition February 17, 2012 A12

For more information on this topic, read our 2012 Provincial budget submission.