Discussion · Government Orders
Jean-Denis Garon Bloc Québécois
“Cutting the gas tax will not automatically lower prices for drivers. Gas stations have room to set their own prices based on local supply and demand. Data from the United States and the past shows they often keep some of that tax cut for themselves.”
“Mr. Speaker, my colleague is right. This market has a unique structure. The question is not whether the GST and QST are added. The question is what the price would be if there were no taxes. Does the member understand what I mean? There are statistical methods for determining whether, when a tax is imposed, the producer has passed it on to consumers or whether the producer has absorbed part of it by lowering their own price before tax. On the CBC website, there is an interesting map where people can see the gas stations in a given neighbourhood. For example, I can see that, in my neighbourhood, in my riding, some gas stations are charging five cents more a litre, whereas others are charging six cents or three cents more a litre. There is some leeway because retailers know their customers, especially in agricultural areas, and supply and demand plays a role in the final retail stage. When we are talking about five cents or four cents on diesel and 10¢ on gas, retailers at the final retail stage definitely have some leeway to assess the situation and they may not lower the price by an amount equivalent to the excise tax discount. That is what the data show, that is what we are seeing in the United States and that is what we have seen historically. I would invite my colleague to take an economics course. He is shaking his head no, but I think he could use one.”
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Mr. Speaker, my colleague is right. This market has a unique structure. The question is not whether the GST and QST are added. The question is what the price would be if there were no taxes. Does the member understand what I mean? There are statistical methods for determining whether, when a tax is imposed, the producer has passed it on to consumers or whether the producer has absorbed part of it by lowering their own price before tax. On the CBC website, there is an interesting map where people can see the gas stations in a given neighbourhood. For example, I can see that, in my neighbourhood, in my riding, some gas stations are charging five cents more a litre, whereas others are charging six cents or three cents more a litre. There is some leeway because retailers know their customers, especially in agricultural areas, and supply and demand plays a role in the final retail stage. When we are talking about five cents or four cents on diesel and 10¢ on gas, retailers at the final retail stage definitely have some leeway to assess the situation and they may not lower the price by an amount equivalent to the excise tax discount. That is what the data show, that is what we are seeing in the United States and that is what we have seen historically. I would invite my colleague to take an economics course. He is shaking his head no, but I think he could use one.