Record high gas prices signal need for carbon tax relief

Posted on 16 March 2022 by Prairie Post

By Kevin Lacey

If you’ve had to drive your kids to hockey, go grocery shopping or commute to work, you’ve likely cursed every time you saw the price at the pump.

Gas prices have now reached a high of over $1.50 per litre. That’s the highest level since Statistics Canada started tracking this data in 1990.

Higher gas prices have a bigger impact on Albertans than on people in the East or British Columbia because we burn more fuel than the average Canadian.

Prime Minister Justin Trudeau told the House of Commons the whole world is experiencing high energy prices and there is little control the government has over it. But Trudeau’s response misses the mark. Government policies have a huge impact on prices. 

On April 1, the carbon tax will increase from nine cents per litre to 11 cents. That’s Trudeau’s third carbon tax hike during the pandemic.

By 2030, Trudeau wants to increase his carbon tax to nearly 40 cents per litre. He’s also bringing in a second carbon tax through fuel regulations that could add an extra 11 cents to the pump price. That means Trudeau’s two carbon taxes could soak a family for nearly $40 bucks every time they fuel up their minivan by the end of the decade.

Increasing carbon taxes are just one factor raising prices. There is a wack of other taxes too.

Each individual tax may cost just a few pennies a litre, but they quickly add up. In addition to the carbon tax, Albertans pay a federal gas tax of five cents per litre and a provincial gas tax of 13 cents per litre. Then, a seven per cent GST is added on top of those fuel taxes. 

Charging the GST on other taxes costs you about 1.7 cents per litre or about $1 when filling up that same minivan. The annual cost to Albertans of this federal tax-on-tax is over $100 million. 

Added together, taxes make up about 25 per cent of the total price of gas or about 41 cents litre. That’s about $28.70 in tax on a 70-litre sedan.

If you think there’s no winners with high gas prices, you’d be wrong. Politicians get to spend more money as you pay the higher price. 

For every one cent gas price increase, the federal government collects $3 million more annually from Albertans just from the GST. So far, the average gas price is up around 33 cents over last year, so that’s a big chuck of change that is being transferred from the pockets of Albertans to Ottawa politicians.  

We can’t let provincial politicians off the hook either. In 2015, the Prentice government raised the provincial gas tax from 10 to 13 cents per litre. Premier Jason Kenney was right to fight Ottawa on the carbon tax. He should go one step further and reduce this previous provincial gas tax hike. That would provide immediate relief. 

In the long term, the solution is under our feet. It’s time for Ottawa to get out of the way and allow our energy sector to build more capacity, approve pipelines and stop roadblocking new projects. That would help increase domestic energy supply and provide government revenues, jobs and investment. Since 2014, $215 billion worth of Canadian resource projects have been stalled or cancelled in part because of governments, according to Secondstreet.org. 

Enough with the political excuses and inaction. Experts say gas prices are going to continue to go up and Albertans can’t afford more pain at the pumps. It’s time for politicians to provide relief and cut taxpayers a break. 

Kevin Lacey is the Alberta Director with the Canadian Taxpayers Federation