As fuel prices continue to rise, some Canadian provinces have cut fuel taxes in an effort to ease the burden on motorists.
This has happened in Ontario, Saskatchewan and Alberta. In British Columbia, however, the provincial gas taxes remain in place, but motorists are receiving a one-time rebate of $110 for individuals and $165 for commercial drivers to relieve pressure at the pumps.
While a break in fuel taxes will provide an immediate break for motorists struggling with the high pump prices, this solution is not necessarily the best in the long term.
Gasoline taxes are significant in Canada, and especially in British Columbia, where motorists in the Vancouver and Victoria areas pay the highest gas taxes in the country.
According to information from the provincial government from April 2022, the total provincial tax on gasoline in British Columbia, outside of the Vancouver area and the Victoria area, is 25.55 cents a litre. In the Victoria area, provincial taxes on gasoline are 31.05 cents a litre and in the Vancouver area, provincial taxes on gasoline are 38.05 cents a litre. Fuel taxes for TransLink in Vancouver and BC Transit in the Victoria area account for the higher taxes — and the higher pump prices — in those communities.
In addition to provincial taxes, there is a federal excise tax of 10 cents a litre for gasoline, as well as a five per cent goods and services tax, according to the federal government.
These figures are significant, but reducing taxes does nothing to address the rising price of crude oil. If gas taxes are reduced but the price of crude keeps rising, motorists will soon pay more than the present price at the pump. Fuel prices are affected by conditions around the world, and a present level of tension and uneasiness is affecting fuel prices. Even though Canada is one of the world’s leading oil producers and ranks fourth worldwide in proven oil reserves, global conditions still affect our crude oil prices here.
More importantly, the money collected from fuel taxes is used for a number of projects, including road construction and numerous community initiatives. Reducing taxes also means a reduction in the amount of money available for these initiatives. Alternately, in order to keep the same amount of total tax revenue, a cut in gas taxes would require tax increases elsewhere.
High prices at the pumps are a concern for all motorists, but a tax cut is not necessarily the wisest way to provide relief for motorists.
— Black Press
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