Ontario’s small business and tourism sectors are optimistic the province’s temporary six-month cut to gas taxes will spur an increase in travel this summer.
On Friday, the province’s gas tax was reduced by 5.7 cents a litre and fuel tax for diesel dropped by 5.3 cents a litre in an effort to provide financial relief amid increasing prices at the pumps. The temporary reduction will be in effect until the end of the year and is expected to cost the province $645-million.
Premier Doug Ford’s Progressive Conservative government introduced the measure back in April to combat the rise in oil prices prompted by Russia’s invasion of Ukraine. Since then, inflation has continued to soar and food and gas prices remain high.
Gas prices may go up as they fluctuate throughout the summer, but Mr. Ford said the tax cut will at least provide some relief for people struggling with the high cost of living. The government estimates this measure will save a family with two cars about $815 over the next six months.
Tourism Industry Association of Ontario President and chief executive officer Chris Bloore said it’s a positive step for a sector that has been hit with a “double whammy” of the COVID-19 pandemic and increased prices. With tourism generated from the Canada-U.S. land border still half of prepandemic levels, Mr. Bloore said he’s hopeful the tax cut will allow families to travel and lengthen their stay.
In a May survey conducted by Leger, 66 per cent of drivers said high fuel prices would prompt them to cancel or limit road trips this summer.
“I’m confident that it’s going to mean those people who are considering changing their trip from two weeks to one week will go back to spending two weeks because the one thing that people have needed desperately for the last two and a half years is the ability to travel and get out and enjoy themselves again,” Mr. Bloore said.
The tax cut is also welcome news for small businesses that have struggled throughout the pandemic. Ryan Mallough, Ontario vice-president of legislative affairs for the Canadian Federation of Independent Businesses, said fuel costs continues to be the top concern and was the top priority for member businesses ahead of the June provincial election.
Mr. Mallough said 54 per cent of member businesses are not back to prepandemic revenue levels and another 62 per cent are still dealing with debt.
“The hope is that it does take a bit of pressure off consumers’ pocketbooks and allows them to perhaps spend a little bit more freely at businesses,” he said.
But with the price of fuel affecting consumers as well as the shipment of goods, Mr. Mallough said additional relief from the federal government would be beneficial.
Speaking to the tax cut on Thursday at a Brampton 7-Eleven gas station, the Premier echoed these sentiments and urged the federal government to provide financial relief of its own by temporarily reducing its share of taxes.
“We need to do more and this is the time for all governments to come together to take pressure off Canadians when they need it most,” Mr. Ford said. “This is a real, tangible solution that we can deliver for Canadians at a time when costs are higher than they’ve ever been and supply chain issues and global conflict are only making things worse.”
Last week, Canada’s Natural Resources Minister Jonathan Wilkinson said the government had no immediate plans to cut prices at the pump, but is instead focused on stabilizing prices by increasing supply.
During his 2018 election campaign, Mr. Ford pledged to permanently cut gas prices by 10 cents. The province scrapped the cap-and-trade system, amounting to 4.3 cents a litre, but that was negated by the federal carbon tax that subsequently came into effect.
For the first weekend with the tax reduction in place, Canadians for Affordable Energy president Dan McTeague said gas prices are expected to drop by 11 per cent on Friday and at least an additional six cents by Saturday. As of Thursday afternoon, the average gas price in Ontario was $2 a litre according to data from the Canadian Automobile Association.
“I don’t think for a moment that oil and gas prices have peaked,” Mr. McTeague said.
Also on Thursday, Mr. Ford confirmed he would be recalling the legislature on Aug. 8 for a five-week session to reintroduce and pass the 2022-23 budget. A budget was tabled at the end of the last term and Mr. Ford said the only anticipated change is a five-per-cent increase to Ontario Disability Support Payment rates.
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