Separate county tax zone simply moves the problem
No simple solution
AMHERST - Creating a separate gas tax zone in Cumberland County may seem like an easy fix for Amherst area retailers, but probably won't work, says consultant Michael Gardner.
Speaking to members of the Nova Scotia Utility and Review Board during a hearing in Amherst on Wednesday, Gardner said creating a new zone within the county would only move the border further into Nova Scotia.
"All you'd be doing is moving the border and the problems you're having in Springhill and Amherst would be moved east and affect stations in Colchester," Gardner said. "In principle a solution that simply adjusts the border to level the playing field with New Brunswick is going to move the problem farther to the east."
He's also skeptical whether simply reducing the tax would be effective because it would represent an even more significant loss of tax revenue to the province than what's already being lost because of declining volumes.
"There are some pretty serious considerations needed in how you design a remedy or whether one designs a remedy at all because doing nothing is still an option," he said. "You can say fine we've lost five million litres but all the stations are running and will continue to run."
Gardner, a partner in the Halifax consulting firm Gardner Pinfold, said there's no easy solution to the situation facing gas retailers along the border with New Brunswick.
"I don't think there is an easy solution to this. A five cent difference (in gas prices) is more than the retail margin most stations operate on," Gardner said. "You're either looking for a fix on subsidizing specific stations, reducing taxes or allowing a lower minimum price in this zone. There are a number of ways of doing it, but none of them are easy because there may be ripple effects."
Under questioning during cross-examination, Gardner said he does not know of any studies of just how far motorists will travel to save money on fuel and he's not sure if a graduated tax model in Saskatchewan, suggested by Cumberland North MLA Brian Skabar, would work in Nova Scotia.
The utility and review board heard from several presenters including representatives from the gas industry, the Town of Amherst, the Amherst and Area Chamber of Commerce, Skabar and the consumer advocate for the province. The board is looking at certain aspects of the Petroleum Products Pricing Regulations as to how they relate to the viability of markets along the border.
Both Robert Grant, representing Sobeys and Dan MacDougal of Irving said URAB hearings last week on gas promotions could carry over to the border issue. They suggested allowing retailers to offer promotions similar to those in New Brunswick while MacDougal said a legislated minimum price would not work in this province because it "limits the ability of Nova Scotia retailers to compete based on price."
Amherst Mayor Robert Small said the five cent difference in price on Wednesday should be adequate proof that change is needed.
"I believe that I speak for the residents and the business people of Amherst when I emphatically say yes, the minimum price needs to be changed to a level on a par with New Brunswick," said Small. "The current situation is not sustainable for our business community."
Small said relief for Amherst should not be done at the expense of other Cumberland County communities.
Gardner said retailers operate on such a narrow margin that removing the minimum price barrier may in itself result in the closure of more gas stations, especially those that don't have the large volumes of gas sales.
Also, while Gardner's submission to the board indicates volumes have dropped by just under 20 per cent since October 2006, he said the situation seems to have stabilized in recent years and should remain stable for several more years.