The provincial government abolished the provincial tax of 13 cents per liter on April 1 after oil prices began to fall and consumers faced inflation. Now soft oil prices have prompted Alberta to partially reinstate the provincial fuel tax as of Oct. 1, Finance Minister Jason Nixon told CBC News on Thursday. For the next three months, the provincial government will collect a tax of 4.5 cents per liter on gas and diesel. “It will result in savings of 8.5 cents on every liter of natural gas and diesel for Albertans going forward, and we will continue to support the fuel tax program,” Nixon said. The program should have saved about $650 million in its first six months, he said. The government said it would review the policy every quarter and consider the price of oil when deciding whether to continue the relief program. The 4.5-cent tax would pump about $30 million a month into provincial coffers, Nixon said. He says the finance department is working on legislation to make the provincial gas tax relief program permanent. However, whether such a bill ever reaches the legislature is up to the next prime minister, he said. Nixon said the administration was looking at the closing price of benchmark West Texas Intermediate oil each day between Aug. 15 and Sept. 15 to decide how much relief will come to the pumps this quarter.
Gas tax and inflation
The temporary program works by adjusting the gas tax based on the price per barrel. The province abolishes the natural gas tax if the average price of oil is higher than US$90 per barrel. A price between US$85 and US$89.99 per barrel would result in a fuel tax of 4.5 cents per litre. If the price is between US$80 and US$84 per barrel, the fuel tax will rise to 9 cents per litre. If the price falls below US$80, the government will fully reinstate the 13-cent provincial tax. Nixon said Statistics Canada has highlighted the tax relief program as an important factor in controlling inflation in Alberta. “This really confirmed for us the need to keep moving forward,” he said. Those who buy branded fuel will continue to enjoy a tax holiday for now, Nixon said. In a fact sheet released in July, the government said the policy has helped control costs for Albertans and kept prices at the pump lower than the average price in the other three western Canadian provinces. After rising to around $1.80 per liter in the summer months, pump prices are falling in Alberta. A central Edmonton station was selling regular fuel for about $1.39 a liter on Thursday. After rising over the summer, natural gas prices are lower in Alberta this September than they were in March 2022, when the provincial government first announced the gas tax relief program. (David Bajer/CBC) NDP energy critic Kathleen Ganley said now is the worst time to reintroduce the provincial gas tax, even if only gradually. While gas prices may be falling, he says high inflation rates are leaving people paying more for food, shelter and utilities. “At every turn, this administration makes decisions without families in mind, including today as we move to raise prices at the pump,” Ganley said Thursday. He pointed to an Ipsos survey of 2,000 people conducted for the insolvency firm MNP that found a third of Albertans were cutting back on spending on essentials because of rising costs. Alberta’s annual inflation rate in August was six per cent. Even with its reintroduction, the province will still have the lowest provincial fuel tax in the country. Yukoners pay a provincial tax of 6.2 cents per liter on gas, and people in Nunavut pay 6.4 cents per litre. The highest provincial tax in the country is in Vancouver at 27 cents per litre. The price of fuel in Alberta also includes a carbon tax of 11 cents per liter and a federal tax of 10 cents per litre. Nixon said the administration is also preparing for a natural gas rebate to begin in October. The rebate is supposed to kick in if the price of natural gas exceeds $6.50 per gigajoule and cover costs above that threshold.
