On Monday, US President Joe Biden said he was considering such a “gas tax exemption” and could make a decision as soon as this week. Asked about the idea during a press conference in Toronto, Finance Minister and Deputy Prime Minister Chrystia Freeland backed existing measures aimed at making life more accessible to Canadians. “Our price for pollution includes an item where we return the money to Canadian families and the amount returned to Canadian families has increased this year,” Freeland told reporters Monday. “Having said that, we are not closing any door and we will be watching the affordability challenges facing Canadian families very, very carefully and we are ready to do more if needed.” Philippe Cyrenne, a professor of economics at the University of Winnipeg, says the federal government could easily have done more by introducing a gas tax permit that would save Canadians about 10 cents a liter. “A 10-cent reduction in the gas tax will save Canadians money,” Cyrenne told CTVNews.ca. “The federal gas tax would go to consumers in the form of lower retail prices.” Since 1995, the federal government has imposed an excise duty of 10 cents per liter on gasoline. Provinces also levy fuel taxes, which vary widely across the country, from 6.2 cents per liter in the Yukon to 14 minutes or more in Manitoba (14.0 cents), British Columbia (14.5), Ontario. (14.7), Saskatchewan (15.0), Nova Scotia (15.5) and Quebec (19.2). If you fill in Vancouver, Victoria or Montreal, these cities charge extra gas taxes. Federal and provincial sales taxes and coal levies also apply. Natural Resources Canada has published an online chart that analyzes it all. Federal Conservatives have called for temporary tax relief on pumps. A handful of provincial governments have already taken action. Alberta suspended the 13-minute gas tax in March and plans to evaluate the decision every quarter. Newfoundland and Labrador temporarily cut gas taxes by 7 cents to 7.5 cents a liter earlier in June. On July 1, Ontario’s provincial gas tax rate will drop to 9.0 cents per liter from 14.7 cents. reduction of 5.7 cents which will remain in force until December 31. The states of Maryland, Georgia, Connecticut, New York and Florida have all made similar moves. The same goes for the United Kingdom, Italy and Germany. The economic consequences of Russia’s invasion of Ukraine have led to a rise in world gas prices. If the Biden government goes ahead and cuts federal gas taxes, Canada will be the only G7 country that has not cut gas taxes or offered a subsidy to compensate for recent pump pain. “Consumers are really hurt by higher gas prices,” US Treasury Secretary Janet Glenn told Freeland at a news conference in Toronto on Monday. “I think that, although it is not perfect, it is something that should be considered as a policy to address it.” Scotiabank chief economist Jean-Francois Perrault agrees. “You’re lowering the price of gasoline, you’re lowering inflation,” Perrault told CTV News Channel Power Play on Monday. “It’s a temporary impact, obviously … But for sure, if you’re helping Canadians deal with higher inflation, one way to do that is to cut gas taxes.” That should focus on the federal carbon tax, said Cyrenne of the University of Winnipeg. “I think it would be appropriate to suspend or even reduce the proposed coal tax increases until oil and gas prices are moderated,” Cyrenne explained. “Higher prices are enough to reduce the demand for fossil fuels, which was the purpose of the carbon tax.” Trevor Tomb, a professor of economics at the University of Calgary, acknowledged that a gas tax holiday would save Canadians money and help fight inflation, but still advised against such a move. “Gasoline prices send an important message to consumers to try to reduce demand for gasoline,” Tombe told CTVNews.ca. “It’s also a very expensive policy for the government in terms of lost revenue. The tax brings the federal government about half a billion dollars a month.” Tombe adds that it also would not help all families in need of support. “Instead, the government can provide targeted relief to lower- and middle-income families who may be struggling with rising prices, no matter how hard they drive,” Tomb said. Most of the money from the US gas tax goes to road infrastructure. in Canada is general tax revenue. While gas taxes are lower in the US than in Canada, both are already among the lowest in the developed world. On Tuesday, Natural Resources Secretary Jonathan Wilkinson said the federal government is focusing more on cutting gas prices by other means. “I think Secretary Freeland was quite clear in her speech earlier this week that we are working on affordability,” Wilkinson told reporters in Ottawa. “But obviously we are also working to stabilize world energy prices through the work we do to increase production.” With files from the Canadian Press
