OTTAWA — The federal government has no immediate plans to reduce prices at gas stations by offering Canadians a temporary suspension of the federal gas tax, Natural Resources Minister Jonathan Wilkinson said Tuesday.
Canada is seeking to stabilize world oil prices by increasing supply, something Wilkinson says is starting to happen. She said that, in the meantime, help for Canadian families is focused on the areas that Finance Minister Chrystia Freeland highlighted in a speech last week.
These include annual increases required for federal benefit checks such as GST reimbursement and the Canada Child Benefit, cuts in childcare costs under new federal and provincial childcare agreements, and increases to be made this summer in both the Old Age Security Pension and the Canada Workers Benefit that were announced in the 2021 budget.
Freeland says the measures together add up to nearly $9 billion.
The Conservatives have been calling on the Liberals for months to cut petrol taxes, including raising the GST on petrol, temporarily suspending the price of carbon or raising the federal excise duty from 10 cents a litre.
For now, Wilkinson said gas tax changes aren’t on the cards.
“We haven’t ruled anything out in the future, I think it would be irresponsible to do that at this point,” he said. “But the plan at the moment is what Minister Freeland said.”
Wilkinson’s comments come a day after US President Joe Biden pondered cutting the federal gas tax south of the border. Other measures to reduce rising gasoline prices, such as freeing up oil supply from US reserves, have not worked.
If the Biden administration goes ahead with the gas tax plan, Canada would be the only remaining G7 country that has not recently cut gas excise taxes or offered a subsidy to help reduce pump prices.
World oil prices have risen 70 percent in the past year, rising mainly since February following the Russian invasion of Ukraine. In Canada, average pump prices are about 70 cents per liter higher than a year ago.
In March, the UK and Italy slashed excise duties on gasoline, and Germany did the same in June. In April, France offered a consumer discount on gasoline. Japan has implemented a subsidy for fuel wholesalers.
Italy’s economy minister said earlier this month that cutting the gasoline tax was costly, but that the country was collecting more value-added tax due to higher gasoline prices and funneling it to consumers. instead of general revenue.
Canada’s GST revenue in 2021-22 was more than $14 billion higher than the previous year. That’s largely due to inflation, including the price of gasoline.
Germany found that gasoline prices only fell temporarily after its gas tax cut. But University of Calgary economist Trevor Tombe said Alberta’s gas tax cut appears to be having the desired effect.
Prime Minister Jason Kenney slashed the 13-cent provincial excise tax on gasoline on April 1, saying it will remain in place as long as the global benchmark oil price rises above $90 a barrel.
“You’ve had over two full months of data and looking at what the effect of that policy change was on prices in Alberta, relative to an estimate of what prices would have been otherwise, then it looks like the total value of the tax, the reduction was passed on to consumers,” said Tombe.
Alberta has the lowest average gas price in the country right now.
However, Tombe said cutting gas taxes is costly and there are other ways to help ease the financial hit for Canadians that can be more efficient. That could include, she said, temporary boosts to income support programs.
“There are much cheaper ways to provide support to families in need, rather than eliminating the tax, which would benefit all drivers, even those who have higher incomes and who don’t really necessarily face affordability challenges.” , said.
The NDP is asking the government to double the GST refund and increase the Canada Child Benefit by $500 this year to help with affordability.
Both programs are indexed for inflation, but that increase is based on inflation a year earlier. So the increase is 2.4 percent: about $7 more for the GST refund per adult and another $114 for the Canada Child Benefit.
Inflation in April was nearly 7 percent, but the annual rate of inflation now won’t be reflected in benefit payments until next summer.
Tombe said the government could catch up sooner by indexing payments quarterly instead of annually.
This report from The Canadian Press was first published on June 21, 2022.
Mia Rabson, The Canadian Press