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article imageAuto Manufacturers Recommend Gas Tax for Canadians

By Kyle Pallanik     May 5, 2007 in Environment
Leaders in the auto industry are pushing Ottawa to introduce a gas tax to improve the environment instead of using the so called 'feebate' reward program, which allows buyers of certain fuel efficient models to get reimbursed up to $2000.
Yesterday at a meeting in Toronto with federal Minister Maxime Bernier, Senior industry executives told her that a tax makes more sense environmentally and would be better for the economy than the current rebate program, which was introduced by the recent budget.
"We should also be looking at what is good for the Canadian economy." said Don Walker, co-chief executive officer of Magna International, a big player in the auto parts sector. "I think the feebate is flawed,"
"The general feeling (in the industry) is you shouldn't be picking winners or losers."
"You should be having regulations that are good for the environment."
"Our opinion is that a gas tax is probably the most effective policy," said Arturo Elias, who is the president of General Motors of Canada Ltd.
The idea of the program introduced in this year's budget gives rebates between $1000 to $2000 to buyers of certain fuel efficient vehicles and penalizes purchasers of certain gas guzzler models, up to $4000.
There are also incentives to get rid of older vehicles that are worse polluters.
Critics that the program is not fair to several auto makers. They claim that it will cost the government money and not have much impact on the environment. Their main complaint seems to be the effect that it would have on jobs in the industry, which is a key factor in the Canadian economy.
Jim Miller, who is the executive vice-president of Honda Canada Inc. said that a gas tax is the way to go, if the government wants to improve the environment and change consumer's habits. In Europe, several countries have introduced gas taxes and it has had the effect of changing their level of driving. "Politically, it is not an easy decision...But it's probably the right one." said Miller.
"The whole fuel-economy issue is really a fuel-consumption issue" said Mark Nantais, who is the president of the Canadian Vehicle Manufacturers' Association. "The best way to reduce greenhouse gases is through a gas tax. It's fair, equitable and gets to the issue of consumption."
Some of the executives also cite the government's list of eligible vehicles for the rebate as being unfair.
For example, the Honda Fit subcompact, which had the eighth-best rating for fuel consumption of all vehicles in Canada and won a federal award for efficiency, does not earn a $1,000 rebate because the car uses one-10th of a litre per 100 kilometres over the limit. The extra 10th of a litre would mean an average extra consumption cost of about $30 annually.
Don Walker told reporters that the federal program encourages people buy vehicles made outside of Canada and this trend has affected the auto industry here, while claiming that it doesn't have much impact on the environment.
He believes that the government's program to scrap old cars and spending on infrastructure that will allow consumers to choose alternate fuels is a better way to go.
Walker and the other executives, acknowledged that a gas tax would not be a popular choice, but also pointed out that environmental issues are high profile right now and opposition parties are spending more time criticizing each other's ideas, rather than trying to work together for the greater benefit.
"We need to get away from politically driven decisions and start doing things on fact-based information," he said.
Minister Maxime Bernier, told reporters that he will take the industry's concerns to the government for study, but when asked whether any changes to the program would be made, he just said "We'll see"
Others have questioned the federal government's program, such as Ontario's Minister of Economic Development and Trade Sandra Pupatello, who is looking for ideas from the industry and it's stakeholders on how to promote auto innovation, jobs and the environment in a mutually beneficial way.
Dennis DesRosiers, who is an industry watcher pointed to the European model as proof that taxes work to help improve the environment stating that both politicians and citizens alike "need to summon just a tiny fraction of their courage and step up to self-responsibility and accountability and protect our environment through a progressive gas tax"
Rant
Okay, here's my take on this. I was actually thinking about buying a hybrid car, because the rebate would help cover the higher cost of purchasing one. A gas tax, that everyone has to pay, would just piss me and a lot of other people off. Car manufacturers should quit whining about the situation and build more fuel efficient cars that fit the profile for the rebate.
Maybe it's easy to change driving habits in Europe, where everything is close together, but things are so spread out in Canada, many people rely on their cars, especially in remote regions where public transit is not readily available.
While I agree that drivers should share the responsibility for protecting the environment, auto manufacturers should also step up and start producing more fuel efficient cars, instead of whining about how to protect their jobs. They keep complaining about losing out to Japanese manufacturers and run to the government for a little bit of coddling.
It's no wonder there have been more sales of fuel efficient cars, the gasoline needed to feed them has been increasing steadily and it's getting to the point where consumers will do anything to avoid paying more. Stack on a gas tax to that calculation and you're going to make a lot of people angry.
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