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GAS TAX CUTS DEBATED AS TRUCK PROTEST HITS CANADA

The great gas revolt, which began in Europe, is spreading to Canada as the Canadian government ponders how to cut gas taxes and head off a planned protest by truckers.

On Friday, as independent truckers staged a wildcat strike and clogged Canada's busiest highway -- the 401 outside Toronto -- with hundreds of slow-moving rigs, federal Finance Minister Paul Martin was searching for ways to cut fuel costs that have nearly doubled in the past year.

Though Opposition leader Stockwell Day of the Canadian Alliance Party has demanded the government repeal the 7 percent Goods and Services Tax (GST) on the price of fuel, government sources are floating the idea of a tax rebate to ensure lower costs wind up in the hands of consumers.

By rebating the GST through the tax system, rather than cutting it directly from the pumps, "we could guarantee the savings would go to consumers, not the oil companies," the source said.

Currently, the Canadian federal government charges -- in U.S. funds -- a tax of a little less than 7 cents a liter (0.26 gallons or 1.06 quarts) on gasoline, which includes about 1 cent in GST.

Day has called the GST on gasoline, "a tax on a tax on a tax," because it is applied on the final price of gas, after provincial and other federal taxes have been applied.

Two years ago, Toronto residents were paying an average of just over 35 cents per liter for regular unleaded gas. This week, the same fuel was selling for more than 52 cents per liter, or more than $2 a gallon.

David Bradley, chief executive officer of the Canadian Trucking Alliance, a shippers association that is not actively involved in the threatened strike, warned a major disruption by the trucking industry could bring the Ontario economy to a grinding halt within hours.

"We have a just-in-time economy," he warned, "and it wouldn't take long to shut down a production line."

Al Palladini, Ontario's economic development minister, said he hoped "calmness would prevail" as all sides work towards a solution.

But worried police officers said if the truckers decide to clog the highways, there is little they can do to stop them.

"How do you remove 200 or 300 trucks?" asked Inspector Brent Mikstas of the Ontario Provincial Police. "It takes hours to tow one disabled tractor-trailer."

Hugh Mackenzie, research director with the United Steelworkers of America (Canada), said that despite the political rhetoric calling for a cut in gas taxes, most of the higher cost of gasoline is not going to the government, but the gas companies.

Compared to the "trivial" amount added to the price of gas by the GST, Canadian oil producers, refiners and marketers are the ones who are absorbing the lion's share of the "pure profit" from the hike in gas prices. But neither Day, who is depending on support from western oil producers, nor Prime Minister Jean Chretien, who is looking towards a possible election this fall, wants to take on the big oil companies, he said.

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