Do high gas prices hurt New Brunswick's tourism industry?
[Cross-posted to The Sorry Centrist]
With Victoria Day weekend already upon us and marking the unofficial start to the summer season, there is no question that many people will be planning to travel. Unfortunately, those who are planning to take to the road this year may find themselves in a huge dilemma whereas high gasoline prices will definite become a considerable obstacle to their travel plans. Not only will Canadian travelers be taking a hit at the pumps, our good neighbours to the south are being negatively affected as well. Nearly one in 10 Americans said they plan to cancel trips altogether to avoid soaring gas prices. And with a quarter of New Brunswick's tourism market coming from the United States, the end result this year could turn out to be devastating for the very fragile industry. And with tourism being the key driver for economic development, creating jobs, stimulating growth and generating tax revenues in our province, the timing of this news couldn't have been worse.
But to blame high gas prices as a single justification for the failure of the tourism industry, here in New Brunswick, is extremely irresponsible to say the least. For starters, our provincial government's add campaign and approach to tourism was erroneous from its inception. In 2005, many of you may remember receiving a full coloured brochure with the Premier and his family on the front advising us to travel within New Brunswick. Well folks, how is that tourism? Shouldn't we be trying to attract people from outside the province? Isn't that tourism in its truest form? We all know that it is a fact that tourism, when properly promoted, can be positive for development when it engenders a strong inflow of foreign exchanges which inevitably promotes growth in other sectors as well as increase overall income and employment in the economy. But sadly, New Brunswick's approach has accomplished none of the above. As Moncton economist David Campbell points out, "If you think of it, the tourism sector creates low wage, no benefit jobs with little value add. In addition, thousands of tourism workers go on Employment Insurance during the off-season and so the net economic benefit must be nearly zero."
So what can we do?
Well, even though I have an overabundance of ideas swimming around in my head regarding this issue, I have not the time, nor the patients, to go into full detail on what policy changes should arise in Fredericton. However, I will gleefully offer up a few suggestions to what can be done in the short-term to mitigate the stress at the pumps? For starters, with gasoline prices hovering above $1 per litre, it is essential that we look to reduce the regressive gasoline tax as it is gouging all consumers. At the moment, taxes account for, on average, approximately 35% of the pump price. Of the entire $5.2-billion collected in gas taxes by the feds in 2005/06, the government earmarked 17% or $882-million on actual road and highway construction and maintenance. A percentage which I believe should be more in the range 50% dedicated to roadway development . And to add insult to injury, the full GST is being charged to the full price one would pay at the pump. In other words, it is nothing more than a tax on a tax where revenues collected by Ottawa will range in the billions for 2005/06, around 1.8 billion to be exact.
But fundamentally, we must remain optimistic, that is why I must encourage Prime Minister Stephen Harper to make good on his promise to reduce gas taxes. For those who may not remember, back in August of last year, then Opposition leader condemned the Liberal government for refusing to lower the gas tax, “There’s no reason for the federal government to profiteer when consumers are hurting.” He also informed the then Martin government to the reality of the regressive tax as many low- to- middle income earners, like many in New Brunswick, are on a fixed budget and may need the extra dollars from a tax cut to gas for a Victoria Day weekend getaway or a planned summer vacation.
But unfortunately, for many Canadians and specifically New Brunswickers, PMSH does not seem, to be willing to make good on his promise. So if this is going to be a harbinger of things to come, we better brace ourselves for a significant economic downturn in the next four months, especially if our tourism industry bottoms out due to high prices at the pumps.
With Victoria Day weekend already upon us and marking the unofficial start to the summer season, there is no question that many people will be planning to travel. Unfortunately, those who are planning to take to the road this year may find themselves in a huge dilemma whereas high gasoline prices will definite become a considerable obstacle to their travel plans. Not only will Canadian travelers be taking a hit at the pumps, our good neighbours to the south are being negatively affected as well. Nearly one in 10 Americans said they plan to cancel trips altogether to avoid soaring gas prices. And with a quarter of New Brunswick's tourism market coming from the United States, the end result this year could turn out to be devastating for the very fragile industry. And with tourism being the key driver for economic development, creating jobs, stimulating growth and generating tax revenues in our province, the timing of this news couldn't have been worse.
But to blame high gas prices as a single justification for the failure of the tourism industry, here in New Brunswick, is extremely irresponsible to say the least. For starters, our provincial government's add campaign and approach to tourism was erroneous from its inception. In 2005, many of you may remember receiving a full coloured brochure with the Premier and his family on the front advising us to travel within New Brunswick. Well folks, how is that tourism? Shouldn't we be trying to attract people from outside the province? Isn't that tourism in its truest form? We all know that it is a fact that tourism, when properly promoted, can be positive for development when it engenders a strong inflow of foreign exchanges which inevitably promotes growth in other sectors as well as increase overall income and employment in the economy. But sadly, New Brunswick's approach has accomplished none of the above. As Moncton economist David Campbell points out, "If you think of it, the tourism sector creates low wage, no benefit jobs with little value add. In addition, thousands of tourism workers go on Employment Insurance during the off-season and so the net economic benefit must be nearly zero."
So what can we do?
Well, even though I have an overabundance of ideas swimming around in my head regarding this issue, I have not the time, nor the patients, to go into full detail on what policy changes should arise in Fredericton. However, I will gleefully offer up a few suggestions to what can be done in the short-term to mitigate the stress at the pumps? For starters, with gasoline prices hovering above $1 per litre, it is essential that we look to reduce the regressive gasoline tax as it is gouging all consumers. At the moment, taxes account for, on average, approximately 35% of the pump price. Of the entire $5.2-billion collected in gas taxes by the feds in 2005/06, the government earmarked 17% or $882-million on actual road and highway construction and maintenance. A percentage which I believe should be more in the range 50% dedicated to roadway development . And to add insult to injury, the full GST is being charged to the full price one would pay at the pump. In other words, it is nothing more than a tax on a tax where revenues collected by Ottawa will range in the billions for 2005/06, around 1.8 billion to be exact.
But fundamentally, we must remain optimistic, that is why I must encourage Prime Minister Stephen Harper to make good on his promise to reduce gas taxes. For those who may not remember, back in August of last year, then Opposition leader condemned the Liberal government for refusing to lower the gas tax, “There’s no reason for the federal government to profiteer when consumers are hurting.” He also informed the then Martin government to the reality of the regressive tax as many low- to- middle income earners, like many in New Brunswick, are on a fixed budget and may need the extra dollars from a tax cut to gas for a Victoria Day weekend getaway or a planned summer vacation.
But unfortunately, for many Canadians and specifically New Brunswickers, PMSH does not seem, to be willing to make good on his promise. So if this is going to be a harbinger of things to come, we better brace ourselves for a significant economic downturn in the next four months, especially if our tourism industry bottoms out due to high prices at the pumps.
