Motorists would save more than 40 cents per liter of gasoline if Quebec eliminated the minimum price on gasoline, the provincial tax and the QST, according to the Montreal Economic Institute (IEDM).
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MEI researchers reacted to the populist proposal of the leader of the Parti Québécois, Paul St-Pierre Plamondon, to limit the price of gasoline to $1.60/L. The politician on Sunday described the increase in the price at the pump as “robbery” on the part of the oil companies.
“Believing that capping the price of gas would have no consequences is worthy of a Disney tale,” commented the director of operations and economist at the MEI, Miguel Ouellette.
If the maximum price is as low as that proposed by Mr. Plamondon, Quebec refineries could be forced to not be able to obtain oil supplies at a price allowing them to be viable and profitable. “After all, ceiling price is synonymous with shortage in many cases, to the great detriment of the population,” he says.
MEI experts suggest that elected officials eliminate the measures in place that artificially increase the price at the pump.
“We currently pay about 60 cents per liter in taxes, which represents one of the highest amounts in North America. We must not forget that these taxes on gasoline affect the price of food, clothing and transportation in general, which accentuates the inflationary spiral that we are currently experiencing. Not to mention the negative consequences on tourism in Quebec and on the mobility of workers,” added Gabriel Giguère, public policy analyst at the MEI.
According to the MEI, the real solution to offer respite to Quebec families would be to abolish the minimum price on gas, the provincial gas tax (19.2 cents/L) as well as the QST (21 cents/ L). Government taxes on gasoline represent more than a third of the price and the minimum price at the pump which undermines competition.
“Although it is true that a high price at the pump is costly for families, trying to reduce it with a populist policy, which ignores basic economic notions, seems counterproductive to me”, concluded Mr Ouellette.
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