Alberta to temporarily suspend provincial gasoline tax in response to increasing prices

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Alberta will temporarily suspend provincial fuel taxes on gasoline and diesel on April 1 to provide relief at the pump for customers, as premiers across the country face pressure to respond to rising oil prices and inflation.

Alberta Premier Jason Kenney, who faces a leadership review April 9, also said the province will provide $150 in electricity rebates for roughly one million homes, farms and businesses.

“Albertans simply need the relief,” Mr. Kenney told reporters Monday, while railing against Prime Minister Justin Trudeau’s plan to increase the carbon tax on gasoline to 11 cents a litre from 8.8 cents next month.

Ontario Premier Doug Ford, in recent weeks, has backed off a promise to lower his province’s gas tax, arguing Mr. Trudeau should first lower the federal carbon price. British Columbia on Monday said it does not plan to follow Alberta’s lead, and last week Premier John Horgan said soaring fuel prices are about global instability, rather than taxes, and consumers must adjust their lifestyles, such as how they travel, during this period.

Alberta’s provincial fuel taxes will now depend on a sliding scale and be adjusted quarterly. When West Texas Intermediate oil, the North American benchmark, is more than US$90 a barrel, Alberta’s 13 cent a litre tax on gasoline and diesel will be eliminated. When oil prices are between US$80 and US$90, a portion of the tax will be applied, though the province did not release specifics. The full tax will be charged if oil is below US$80. WTI traded above US$119 a barrel Monday afternoon.

“This is basically the reverse carbon tax,” Mr. Kenney said.

Gasoline prices in Alberta are low compared to other regions. Regular gasoline cost $1.57 a litre in Calgary and $1.55 in Edmonton on March 4, according to Natural Resources Canada. In comparison, gasoline cost $1.58 a litre in Regina on March 4; $1.75 in Toronto; $1.69 in Fredericton; and just over $2 in Vancouver.

In Ontario, Mr. Ford came into office in 2018 pledging to slash gas taxes in the province by 10 cents a litre. He immediately cancelled Ontario’s cap-and-trade greenhouse gas emissions reduction system, which his government said would reduce gas taxes by 4.3 cents. But this move triggered the imposition of the federal carbon price on the province, negating this savings.

Mr. Ford had also pledged to further lower gas taxes by cutting the province’s excise tax on fuel by 5.7 cents a litre – but has so far not done so. Just last November, Mr. Ford committed to making that cut before this year’s budget, which is now expected before the end of April.

Ford spokeswoman Ivana Yelich, in a statement after Alberta’s announcement, said both the Premier and his Energy Minister, Todd Smith, have been “clear on calling for the federal government to scrap or delay their planned increase to the carbon tax so that Ontario’s decreases are not immediately wiped out by federal tax increases.”

B.C.’s Premier last week said fuel prices will continue to be volatile until international markets calm.

“An 18 cent increase in a litre of gas is not about taxation,” Mr. Horgan said March 3. “It is about uncertainty in the marketplace, it is about instability as a result of the Russian invasion of Ukraine and we need to, all of us need to, act accordingly. We need to make choices about how we act, where we go, how we travel.”

Saskatchewan’s Opposition on Monday said the provincial government should mimic Alberta’s approach. NDP finance critic Trent Wotherspoon says the Saskatchewan Party government needs to offer relief on the price of gasoline to soften the impact of other increasing costs on families. Saskatchewan drivers pay 15 cents a litre in provincial taxes on gasoline.

Saskatchewan Finance Minister Donna Harpauer said the government is addressing affordability for residents in many ways, such as a home renovation tax credit and a refundable tax benefit for children’s cultural, recreational and sports activities.

Alberta expected to collect $736-million in gasoline taxes and $548-million in diesel taxes in 2022-2023, according to its budget released Feb. 24. The budget calculated a surplus of $511-million, which would mark the first time revenue outpaced expenses in eight years.

Mr. Kenney noted the changes to gasoline and diesel taxes will not dent the surplus because the relief triggers only when oil prices are high, which means the government would be collecting higher-than-budgeted royalty fees from energy firms. The budget predicted $13.8-billion in royalties from non-renewable resources, based on WTI trading at an average of US$70 a barrel in the next fiscal year. For every $1 increase in WTI, Alberta forecasted it will bring in another $500-million in royalties.

With files from The Canadian Press

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