No simple solution

Darrell
Darrell Cole
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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.

dcole@amherstdaily.com

Organizations: Nova Scotia Utility and Review Board, Area Chamber of Commerce, Petroleum Products Pricing Regulations Sobeys

Geographic location: AMHERST, New Brunswick, Nova Scotia Cumberland County Springhill Colchester Halifax Saskatchewan

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Recent comments

  • Greg
    February 24, 2010 - 23:46

    Mr Gardner seems to be missing a major point. Sure, people will still travel west to get cheaper gas, even if we move the *border* east of Amherst. But in the current situation, all of the gas tax revenue that the province would normally enjoy leaves the province permanently! moving the border east will surely result in other communities travelling to Amherst, but the tax revenue will stay in the province. This is beneficial to all, and is undoubtedly the reason the gov't is even considering this action.

    Gardner also states that lowering the tax may not work because of declining volumes ... umm, the volumes aren't declining, they are shifting to NB becasue of the price! We are not driving less! If anything, we are consuming more gas than ever. Lowering the price will return the volumes to where they should be ... in Nova Scotia!

  • Lucky
    February 24, 2010 - 23:46

    The solution is simple. Just move the New Brunswick border to the Cobiquid Pass. Problem solved!
    Things in N.B. seem to progress faster. Just look at the construction of all the new buildings and infrastructure. Growth is far more ahead than our area. I guess it boils down to Leadership.

  • peter
    February 24, 2010 - 23:46

    Who is going to pay the 4 dollar toll to drive from Colchester County to Cumberland County to get gas in Amherst or Springhill, or for that fact Pugwash? Drop the price in our area!!!!!

  • Ron
    February 24, 2010 - 23:46

    Well Well Well. Another broken promise by the NDP. I am sure the NDP spin doctors will tell me it wasn't a promise but we all know that Dexter and the gang were misleading us into thinking that a gas tax change will happen. Just another carrot dangled in front of us to vote for them. Well, I admit that I voted for NDP thinking that they will be good to the people. And now the jail is gone to another riding, the gas tax promise is nothing but words. Next on the radar is the Health Authority being dismantled. I think my brother was right in reminding me about Bob Rae in Ontario. I am the sorriest SOB for voting for NDP. Never again.

  • Tim
    February 24, 2010 - 23:45

    Artifical border leveling the playing field blah blah blah, the fact still remains that as long as gas is 5 cents or more cheaper across the border thats where I'll be buying my gas. I love to be able to leave my money in Nova Scotia but when everything is cheaper 5 minutes away it all comes down to leaving more money in my pocket so I can spend it on my family.

  • Fuzzy Bear
    February 24, 2010 - 23:45

    Who the He** is Michael Gardner and why should he give a rats rump about our area. This exercise was nothing more than a stalling tactic to avoid doing anything about this serious problem. His observations that our local retailers are surviving and will continue to do so is such a typical arrogant attitude. What did we expect a hired consultant to say originating from the Halifax area. His company will get paid thousands of bucks to be the Governments sacrificial lamb up here on this issue regardless. Should we be surprised he has these opinions because there is no direct benefit from this gas tax reduction plan that he could enjoy. PS I do bet his company has an E-Pass or he gets to claim his $8 in tolls on his expense reports which then get charged back to the government that we pay for in our taxes. How ludicrious is that!! Can we say the same on our next trip to the big city? And his comment that doing nothing is still an option is just what the nay sayers wanted to hear.
    Folks doing nothing is not an option.. people are crossing the border and as the weather gets better more will commence doing so. If you have a mid size car or truck with a larger tank capacity it definately benefits you to make the 6.6 km trek over to Aulac. At 5 plus cents a liter do the math yourselves...I have.
    I truly feel sorry for the local retailers and if I'm just topping up I will continue to do it here but for a full tank fill up....off we go.
    And Ron I too was one of the swing votes in the last election however I am sorry to see that the NDP appear to be no different than the other two deadbeat parties. I was so hoping to see a new fresh, honest, and open political beginning.
    Lastly some of you Star Trek fans may remember Scottie's famous line - Fool me once...shame on you.....fool me twice... shame on me. Mr. Skabar and Mr. Dexter, if action doesn't happen on this soon I for one won't be fooled again.

  • Jennifer
    February 24, 2010 - 23:45

    Last night I paid $0.909 a litre here in Calgary at a Petro Canada gas station. I have been out here for over 2 years and gas is always way cheaper here than it is in Nova Scotia.
    It is made in both places so the higher cost for shipping argument won't work...
    I agree that Amherst is isolated from the rest of the province - but it's not just Amherst. You also have Springhill, River Hebert, Joggins, Advocate, Tidnish, Pugwash, etc. You have to think about the whole area, not just Amherst because I can guarantee you, most of those areas have people travelling to New Brunswick to shop as well. Weither it is for variety or lower prices is debatable, but overall it is a combination of both.

  • The Dude
    February 24, 2010 - 23:45

    Maybe they should just move the toll booths to the NS NB border ... that would fix it!

  • know it all
    February 24, 2010 - 23:45

    WELL THE PICTURE SHOWS IT ALL , EVERYONE SHOULD CUT IT OUT - YOU WILL NEVER SEEN SO MANY USELESS PUPPETS AGAIN GATHERED AT ONE TABLE , RANDY SMITH - SMALL , SKABAR , TOTAL WASTE OF TAXPAYERS MONEY - LOOK AT THE LOOK ON SMALL'S FACE - HE IS TOTALLY LOSS ON WHERE TO PUT THE X IN THE X & O BOX . RUMMOR HAS IT RIPLEY'S BELIEVE IT OR NOT WAS IN TOWN FOR THIS MEETING HOPING ON ONE OF THESE TWITS TO MAKE A SENSEABLE STATEMENT - THEY LEFT EMPTY HANDED AGAIN

  • HB
    February 24, 2010 - 23:45

    The headline for this story cracks me up.

    There is a simple solution. Tax parity with NB for everyone this side of the already created border - the toll on the Trans Canada.

    But, the real story is there if you read carefully - *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.*

    In other words, if they drop the tax and everyone goes back to buying gas in NS, they won't end up collecting any more money on tax. So it's really the GOVERNMENT won't see any more money. Screw the INDEPENDENT BUSINESSES that would.

    Worst. Government. Ever.

  • Bill
    February 24, 2010 - 23:45

    If the current government chooses to reduce the price of fuel in the Amherst area to address the current pricing differental versus New Brunswick; I suggest they will create a very negative consumer reaction in the balance of this province.

    This reaction will not be favourable and this legislation could very well be illegal under our provincial law.

    From a moral perspective, it is wrong, period.

  • Vince
    February 24, 2010 - 23:45

    I do believe that consumers will continue the 5 minute drive from Amherst N.S. to Aulac N.B to save a minimum or 5 cents on a litre of gasoline, while at the same time save approximately 30 dollars on a carton of cigarettes. The tax base in N.B. is somewhat lower than here in N.S.
    I have travelled to Aulac for gasoline late at night as the pumps here in this area close before midnight, while the Circle K in Aulac is open 24/7. If the pumps here in the Amherst area would take turns in staying open later, then that may help late night travellers.

    THANK YOU

  • Greg
    February 24, 2010 - 23:45

    Joe Blow, there was only one comment that even made reference to the NDP ... hardly justification for your off-topic rant.

    the only hard question we are facing has nothing to do with the former gov't, it only has to do with the present and future of the area ... and that is Where do we go from here?

  • Joe
    February 24, 2010 - 23:45

    Its pretty rich to hear people criticize the NDP as if this parity problem was of their doing. Its as if people believe price parity will solve the problem of an aging population and stagnant growth.

    And also gas price parityisn't the only issue. Parity for every possible thing sold is simply not possible or even should be the purview of Governement.

    I'm no fan of the NDP but at least this Government makes decisions.

    Why is no asking the really hard questions, like why didn't the conservatives tackle this while in power? Why is it such a NOW issue? Oh I get it now, its simply a platform for potential conservatives because Cumberland is basically old white guy conservative country. They do nothing about the issue while in power but when not they cry.

  • Joe
    February 24, 2010 - 23:45

    Wow Gardner...someone who is actually smart speaks well and and tells things as it is.

    The current situation is not sustainable for our business community? Really where are all the boarded up businesses? Amherst's population hasn't grown its just aging.

    Whether gas prices are matched or not....will change little for Amherst. But who cares about so called ripple effects lets think of those later, we need price parity!!! Not new businesses in Amherst just some milk priced relatively the same.

  • WTH?
    February 24, 2010 - 23:45

    If this Gardner guy is so smart why didn't he figure in the cost of the toll into his conclusion. As peter from amherst so rightly pointed out, nobody is going to pay $8 in tolls to save $4 in gas. That argument alone totally defeats Gardener's logic about moving the border.

  • Steve
    February 24, 2010 - 23:45

    I think a very doable solution is the one stated earlier:
    Cheaper tax on this side of the toll.

    I also agree the toll is a true current border which solves the problem of moving the border because people wont pay a toll to get cheaper gas, and the taxpayers who are currently suffering from inequitable gas prices will spend their money on NS gas. win-win