High and hidden taxes driving up the price at the pump

presented by the Canadian Taxpayers Federation

To Canadian politicians, the soaring cost of living is like winter’s slush, summer’s mosquitoes and other unfortunate forces of nature. They would like to help, but what can they do?

Here’s an idea: our politicians just have to follow the example of other countries and reduce the pile of hidden taxes they charge at gas pumps.

Canadian drivers pay six different taxes in some major cities. For example, Montreal drivers pay provincial and federal gasoline taxes, provincial and federal sales taxes, public transit tax, and carbon tax. Motorists in Vancouver, where taxes make up 38% of the price at the pump, also pay six different taxes.

With taxes representing more than 55 cents per liter of gasoline on average, a family pays approximately $40 in taxes to fill their van. That’s a lot of money that could help pay for groceries or baseball cleats for the kids.

The federal government and some provinces impose a sales tax in addition to other taxes. That means politicians tax the fuel you need to drive, and then they tax those taxes. This tax on tax adds more than four cents to the average price at the pump.

Provincial politicians can provide relief today by following the example of Alberta, which reduced its fuel tax by 13 cents per litre.

“While the national inflation rate rose in April, the rate fell in Alberta,” said Trevor Tombe, an economist at the University of Calgary. “The fall in gasoline prices because of the tax exemption is the reason.”

Authorities could immediately provide similar relief.

Conservative leadership candidate Pierre Poilievre’s proposal to scrap the carbon tax and suspend federal fuel and gasoline sales taxes would save an Ontario family $20 every time that she fills up her van.

The heavy tax bill that Canadians are paying at the pumps is about to get worse.

The federal carbon tax has increased three times during the pandemic, and Prime Minister Justin Trudeau has said he will continue to raise the carbon tax until it reaches nearly 40 cents per liter in 2030 .

While the Trudeau government claims that “families will be better off for it” thanks to its carbon tax and rebate, the Parliamentary Budget Officer shows that these politicians are using magic calculations. Even at the low end, including the rebate, the Parliamentary Budget Officer’s analysis shows Trudeau’s carbon tax will cost an average family $300 this year, rising to $1,145 in 2030.

The Trudeau government is also imposing a second carbon tax through fuel regulations that could add another 11 cents per liter to gasoline by 2030. But even that is likely a low estimate of the true cost. British Columbia has a second carbon tax that currently costs about 17 cents per liter of gasoline, helping to make British Columbia one of the least affordable places on the planet. And there is no rebate with the second carbon tax.

While Ottawa is imposing higher tax bills on Canadians, there is a long list of other countries doing the right thing.

The UK has announced an $8 billion fuel tax break. South Korea has reduced its gasoline tax by 30%. Germany reduces fuel taxes. The Netherlands reduced its petrol tax by 21%. Italy, Ireland, Israel, India, Peru, Poland, 25 Indian states and union territories, Newfoundland and Labrador, New Jersey and Florida are also reducing taxes on the ‘essence.

Other jurisdictions reduce more than gasoline taxes.

Italy reduced income and business taxes. Spain, France and Austria have reduced electricity taxes. Sri Lanka cuts taxes on food and medicine. Brazil and Colombia reduce import taxes. Turkey reduces taxes on foodstuffs. South Africa has reduced business taxes. Croatia reduced taxes on energy, sanitary products and food. Greece, Algeria and Albania also announced tax relief.

Other countries are showing that it is possible to cut taxes to help mitigate the rising cost of living. There’s no reason why our politicians shouldn’t reduce gas taxes to help Canadians meet their daily needs.

Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation

Editor’s note: Morinville Online welcomes letters and opinion column submissions from the general public as well as sitting government MPs and groups whose mandate is to hold government to account.

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