Finance minister says Alberta will partially restore regional fuel tax

The tax holiday for Albertans at the gas pumps fades with the summer weather.

The county government scrapped the county’s 13 cents per liter tax on April 1 after oil prices began to swell and consumers grappled with inflation. Treasury Secretary Jason Nixon told CBC News on Thursday that sluggish oil prices have prompted Alberta to partially return the regional fuel tax from October 1.

Over the next three months, the county government will collect a tax of 4.5 cents per liter on gas and diesel.

“This will result in 8.5 cents on every liter of gas and diesel savings for Albertans in the future, and we will continue to build on the fuel tax program,” Nixon said.

He said the program should have saved consumers about $650 million in the first six months of its launch.

The government said it would review the policy every three months and would consider the price of oil when deciding whether to continue the relief programme.

Nixon said the 4.5-cent tax would transfer about $30 million a month into county coffers.

He says the Treasury is drafting legislation to make the province’s gas tax-exempt program permanent. However, the possibility of such a bill reaching the legislature depends on the next prime minister, he said.

Nixon said the government looked at the closing price of benchmark West Texas Intermediate crude every day between August 15 and September 15 to decide how much rest the pumps would have this quarter.

Gas tax and inflation

The temporary program works by adjusting the gas tax to the price of a barrel.

The province cancels the gas tax if the average oil price is above $90 a barrel. A price between $85 and $89.99 per barrel would result in a fuel tax of 4.5 cents per liter. If the price is between $80 and $84 per barrel, the fuel tax will rise to 9 cents per liter. If the price drops below $80, the government will refund the entire 13-cent county tax.

Nixon said Statistics Canada cited the tax break program as an important factor in controlling inflation in Alberta.

“This really emphasized to us the need to continue to progress,” he said.

Nixon said people who buy premium fuels will continue to enjoy a provincial tax break for now.

In a fact sheet published in July, the government said the policy had helped control costs for Albertans, and kept prices at the pumps below the average price in the other three western Canadian provinces.

After prices have risen to about $1.80 per liter in the summer months, Alberta pump prices have fallen. A central station in Edmonton was selling regular fuel for about $1.39 a liter on Thursday.

After rising over the summer, gas prices in Alberta are lower in September of this year than they were in March 2022, when the province’s government first announced the gas tax credit program. (David Bagher/CBC)

Now is the worst time to reintroduce the province’s gas tax, even if gradually, said Kathleen Ganley, an NDP energy critic.

Although gas prices may come down, she says, high inflation rates are making people pay more for food, shelter and utilities.

“At every turn, this government makes decisions without considering families, including today as we move to increase prices at the pump,” Ganley said Thursday.

She points to an Ipsos survey of 2,000 people for the insolvency firm MNP, which found that a third of Albertans cut back on spending on necessities due to rising costs.

Alberta’s annual inflation rate as of August was six percent.

Even with its reintroduction, the county will still have the lowest regional fuel tax in the country.

Yukoners pay a 6.2 percent per liter provincial tax on gasoline and people in Nunavut pay 6.4 cents per liter. The highest county tax in the country in Vancouver is 27 cents a liter.

The Alberta fuel price also includes a carbon tax of 11 cents per liter and a federal tax of 10 cents per liter.

Nixon said the government is also preparing a discount on natural gas for consumers starting in October. The discount is supposed to start if the gas price exceeds $6.50 per gigajoule and will cover the cost over that limit.

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