Contributed by Robert Lyman © 2019
We were remiss in not reporting previously on the Canadian Taxpayer Federation (CTF) 20th Annual Gas Tax Honesty Report published on May 17, 2018. The federation’s analysis of the taxes on motor gasoline and diesel fuel is directly relevant to the current controversies about carbon taxes and their economic effects today.
Here we will present only some of the main points from the CTF report. Those who are interested in the details can view the entire report here:
In 2018, the national average gasoline price was $1.35 per litre, including 54 cents in taxes.
Gas Price Ranking
The pump price of gasoline in any one location is the total of the pre-tax price (based largely on the costs of crude oil, refining and marketing) and the tax bill. Table 1 shows the 2018 average pump prices for selected cities in Canada.
Gas Price Ranking (Dollars per litre)
|Province/City||Pump Price||Pre-Tax Price||Tax bill|
Notice that Vancouver has the highest pre-tax price and pump price, but Montreal has the highest tax bill.
It seems more taxes are added to gasoline every decade. Depending on where they live in Canada, motorists who use gasoline or diesel fuel can be subject to federal and provincial excise taxes, sales taxes, transit taxes (Vancouver and Victoria), carbon taxes, and the strange “tax-on-the-tax” because the HST is applied to other taxes.
The fastest growing tax on motor fuels is the carbon tax. Because of the different tax regimes among the provinces, carbon taxes in 2018 ranged from the minimum required federal carbon tax of $10 per tonne of carbon dioxide equivalent to $18 per tonne in Ontario and Quebec, to $30 per tonne in Alberta and $35 per tonne in British Columbia.
Under the federally imposed regime, the minimum carbon taxes will rise from $10 per tonne in 2018 by $10 per tonne per year until they reach $50 per tonne in 2022. Depending on which political party is in power, they will go on rising significantly after that. Table 2 shows what this means to the motorist.
Federal Government Minimum Carbon Tax
The True Carbon Tax
If the purpose of carbon taxes is to discourage use by raising the cost, that objective is being served by all the taxes on gasoline and diesel fuel, taxes that are not borne by other fuels. The true “carbon tax” is thus the per tonne of carbon dioxide equivalent of all the taxes imposed on motor fuels, and especially gasoline. Table 3 shows what this meant for gasoline consumers in different cities in 2018.
The True Carbon Tax
|Tax per Tonne|
The Canadian average for this carbon tax equivalent is $192 per tonne.
The taxes already on gasoline and diesel fuel yield enormous revenues. As the federal excise tax revenues are returned to the provinces to pay for transit expenditures, by far the majority of these funds go to the provincial governments. Table 4 indicates CTF’s estimates of the total revenues from taxes on gasoline and diesel fuel in 2018.
Gas and Diesel Tax 2018 Revenue Estimates
|Provincial Per-litre Taxes||11,987|
|Provincial Sales Tax||3,803|
|Federal Excise Tax||4,733|
|Federal Sales Tax||3,528|
In other words, even without counting the carbon taxes, Canadian governments took in over $24 billion in revenue from taxes of motor fuel in 2018.
As the Canadian Taxpayers Federation says in its report, it’s time for some tax honesty.