Province partially reinstating fuel tax

Drivers face 4.5 cents per litre levy next month as global oil prices fall

The provincial fuel tax will be partially reinstated next month as global oil prices continue to drop.

The province confirmed Thursday it would place a 4.5 cents per litre tax on gas starting in October as the price of West Texas Intermediate has dropped to an average of $89.26 per barrel in the four weeks preceding Sept. 15. The province initially removed the entirety of its 13 cents per litre tax in April as prices soared. At the time, Premier Jason Kenney said the tax would be gradually reintroduced if oil prices dropped below $90 per barrel.

Finance Minister Jason Nixon said in a statement that Albertans have already saved more than $600 million through the tax cut.

“The program continues to provide fuel tax savings as long as the average price of WTI is above US$79.99 per barrel,” said Nixon. “Albertans will save over $200 million over the next three months with fuel tax savings at 8.5 cents per litre starting Oct. 1.”

Nixon said the government committed to reviewing the relief measure quarterly. He said even after reintroducing a portion of the levy, the province will continue to have the lowest provincial gas tax in the country. The program will next be reviewed in December.

“As the global economy slowed, WTI prices over the four-week period ending Sept. 15 averaged $89.26 per barrel. Over this same period, Albertans have been paying the lowest gas prices in the country,” said Nixon.

Thursday's oil price of $83 per barrel represents a significant decrease from the yearly high of more than $123 per barrel in March.

NDP energy critic Kathleen Ganley called on the province to hold off on reinstating any portion of the provincial fuel tax until the end of January. She said Albertans are continuing to struggle with high inflation heading into the winter months, and delaying the return of the fuel tax would help keep money in Albertans' pockets.

Canada's inflation slowed to seven per cent in August, down from 7.6 per cent in July.

“The challenge that we're seeing today is that even though fuel prices are coming down, prices on a number of other items — including groceries and utilities and a lot of basic costs for Albertans — are still very, very high,” said Ganley. “We're seeing fuel prices potentially coming down, Albertans are finally seeing a tiny bit of relief, and the government is sort of (clawing) that relief back from them.”

Ganley also called for the UCP to reinstate a rate cap on electricity to address rising costs.

Blake Shaffer, an assistant professor at the University of Calgary's department of economics, said reinstating a portion of the gas tax will cost about $4.50 a month for the average driver.

Shaffer also noted the government had always stated the tax would be reinstated based on market trends.

“They set a rule-based program for how this would come back, probably for the purpose of depoliticizing it, because the moment you remove a tax, when you bring it back on, some folks are going to view that as a tax hike even though it's partially ending the suspension,” said Shaffer.

He said the government has many other means to address pressures on families brought on by inflation.

“Let's find the folks who are most at risk of not meeting their budget and provide relief through many of the channels government has to do that,” said Shaffer. “If we're looking at making life more affordable for folks, that isn't in removing taxes on one specific good, that's about either lowering broad-based taxes or providing relief back to folks.”

He said increasing the Alberta child benefit would be one way to provide broader relief. He also noted the government's electricity rebate, while not always reaching consumers if they rent, is another example of how relief can be provided without directly attaching it to the consumption of a good.

Meanwhile, the province announced Thursday that the Utilities Consumer Advocate (UCA) would undertake a public awareness campaign to help Albertans understand the utility market in the province and find the providers who can offer the lowest costs. Electricity prices have continued to skyrocket throughout the year, leading to the province offering a rebate program offering $300 in savings on household bills over six months.

“Albertans are already looking for ways they can save money on their electricity and natural gas bills. We want this campaign to let them know that the UCA is their best place to go for tips and advice on energy choices to find the right plan for their family,” said Service Alberta Minister Dale Nally.

The UCA is reminding Albertans they can enter into a fixed rate contract for their utilities to help combat market volatility. Such contracts are still eligible for the provincial rebate program.