Mr. Speaker, I will be splitting my time with the hon. member for Algoma—Manitoulin—Kapuskasing.
There are too many dimensions here to address in a 10 minute speech. I will just declare that the long term approach to higher energy prices and gas prices has been well addressed by both ministers who spoke earlier, so I will not talk about some of those long term things that we can do.
I am sure that most members in this place heard very strongly from their constituents about their concerns on this issue. It is an important issue. The better educated all members and Canadians are about what the push pulls of energy pricing are, the better off we are. Then we will all begin to agree on what are our viable options to dealing with the spike in energy costs.
I am not just talking about gasoline. We have just had an increase of over 15% in natural gas costs in Ontario effective July 1, and it is expected that all other forms of energy will also follow suit, so we are definitely in for a significant increase in the cost of energy.
I also want to declare that I do not want to talk about the commercial aspect like truckers and whatever. There are some special things like flowthrough or input tax credits on GST. It would not make the numbers comparable, so I want to talk about the ordinary consumer, who is the end user of the commodity, in this case being gas.
I also want to declare that we cannot just talk nationally about this because we have excise taxes at both levels of government, but each province is different. We have HST in the east and we have no provincial tax in Alberta. From the perspective of Ontario, I can give an idea to Canadians about what is included in the price of gas.
In the province of Ontario, if refiners produced a litre of fuel at 70¢ per litre, there is a 10¢ excise tax per litre, which brings it up to 80¢. Then there is a 15¢, actually it is 14.7¢, provincial excise tax, which now brings it up to 95¢. Then there is GST that we pay on commodities that we purchase. That is 7% of 95¢, which is 6.5¢. That litre of gas that the producer produced at 70¢ will now cost the consumer 101.65¢, around a dollar.
As we can see, in terms of a litre of gas that was produced at 70¢, the producer cost to the consumer is 70% of the total and 30% is taxes split between the federal and provincial governments. In fact, 15¢ is provincial and 16.65¢ is federal, so it is roughly split between the two. Compare that to the situation where the world price of a barrel of oil increases and all of a sudden the refiners have to purchase that oil at higher world prices.
Let us say they produce it at $1. The provincial excise tax stays the same because it is on a per litre basis. It does not matter how much the commodity costs, it is still 15¢. The federal excise tax is also the same. It is still 10¢. It does not go up with the price of the commodity. It is a flat price per litre.
That $1 per litre of produced refined product, plus the 15¢ provincial excise tax and the 10¢ federal excise tax brings us up to 25¢ and the GST on top of that is 8.75¢, so it is now 133.75¢, almost $1.34. Of all of that, 75% of the component cost is the producer cost. It is the $1 as a per cent of $1.34 that the consumer pays.
The federal component, which is important to understand in either scenario, ranges from about 14% to 16% as the federal take. Canadians should know what it will mean. People told me that gas is up at $1.20 and it really should be back at 75¢.
I asked the question and received the answer this evening about the one penny reduction in taxes to Canadians. A one penny reduction in any tax, either the excise tax or the GST, is $400 million. When people say why do we not have a 5¢ reduction, that would result in $2 billion. Now we have to talk about the magnitude of the revenue impacts to the government because people are actually saying gas should be 75¢ or 85¢. In other words, we are talking about maybe a 25¢ reduction in the consumer cost per litre which would be $10 billion. I do not know where we get the $10 billion because that would certainly impinge on the things that are also important to Canadians such as health care.
Let me move on. There will be some discussion about the tax on tax. This has to do with the fact that the goods and services tax, as with any natural resources product where there is an excise tax, is a federal excise tax included in the price. It is 10¢ and the 7% GST is .7¢. So the tax on the tax is only .7¢. Even if we include it on the provincial portion, the maximum we are talking about is 1.75¢. It is not enough that it would really change things. But people say we still have to do something. I agree. We should do something.
Supply and demand issues I am sure have been discussed and will be discussed by others, but we do know that the OPEC countries, Brazil and Mexico, are the ones that feed the supply for the world demand for oil. Even though Alberta produces oil and we have some offshore oil, we are price takers. We are not price setters. Canada does not make the prices. That is the reality. We cannot tell Alberta that it should set a different or more beneficial price for Canadian consumers. Alberta producers are in business and unfortunately we cannot have it both ways. In a democratic society, in a free trade society, they have to have that opportunity.
It is extremely important not to forget that as part of the last election campaign platform and it is in the process of being delivered, half of that federal Excise Tax Act money has been promised and it is going to be delivered to the municipalities across the country over the next five years. It is almost $5 billion. Of the taxes that we are collecting on gasoline, some is already going to the municipalities for infrastructure, for green projects, for transit, for all of those things that are very much related to this whole energy equation because it is not just driving a car. Everything we touch has something to do with fuel.
I would like to see three things happen. First, I would like to continue our commitment to the municipalities across the country, so that they will continue to get 50% of the federal excise tax. Second, I am very much in favour of yet another energy rebate to low and modest Canadians to reflect the fact that there is a spike of energy costs. It may be more than a spike. It may be lasting. If we were to give it across the board, that means the amount that any one Canadian would get would be smaller. If we were to focus it and target it on those most in need, those least able to afford these higher increases, we would be able to allow a little bit more.
Finally, and this is extremely important. When Canadians say one gas station has a price that changes and the guy on the opposite corner changes his price, they say it must be anti-competitive activity, it must be collusion, and it must be price-fixing. Canadians do not believe what they are hearing. The minister said in his speech that there was no evidence in the last review of any anti-competitive activity. If Canadians are not convinced, we have to do something to convince them. That is why we should have some changes in the Competition Act that would permit the Competition Bureau to trigger its own investigations at its own volition rather than having to wait for a complaint to be formally lodged, so that it can be a more aggressive watchdog on behalf of all Canadians.