Tax Accounts for up to Nearly 40 Percent of Gas Prices Canadians Pay: Taxpayer Rights Group

Gas prices are displayed at a gas station in Carleton Place, Ontario, a town just west of Ottawa, on May 17, 2022. Sean Kilpatrick/The Canadian Press

With soaring energy prices weighing down on Canadian motorists, federal and provincial gas taxes are making their struggles even harder, a taxpayers’ rights group says, noting that some of those taxes are hidden and don’t appear on the receipt.

The Canadian Taxpayers Federation (CTF) said in its recently released 2022 Gas Tax Honesty Report, based on gas and diesel price information from April, that taxes account for 55.1 cents per litre of gasoline on average across Canada, and make up between 18 and 38 percent of the price Canadians pay at the pump, depending on the city or province.

According to the CTF, Vancouver has the highest gas prices in the country, at $1.98 per litre on average in April, with 75 cents of that, or 38 percent, being tax. Meanwhile, Alberta has the lowest gas prices in Canada, at $1.54 per litre, with 28 cents of that, or 18 percent, being tax.

“Politicians’ hidden taxes are making soaring gas prices even more painful,” CTF federal director Franco Terrazzano said in a May 19 news release. “Federal and provincial politicians could provide significant relief right now by cutting the big tax bill Canadians pay at the pumps.”

Canadians could be paying as many as six different types of taxes every time they fill up their gas tanks, and not all of the taxes appear on the receipt, the report said. In Montreal, drivers are paying all six.

“Gas taxes include the sales taxes you see on your receipt, but also the federal excise tax, provincial excise tax and carbon taxes you don’t see,” the report said, providing a table showing that drivers in all 10 provinces pay federal sales tax on gasoline while drivers in all provinces east of Manitoba also pay provincial sales tax.

“In some cities, you also pay a hidden transit tax,” the report added, referring to cities such as Vancouver, Victoria, and Montreal.

The CFT said drivers are also charged a “tax-on-tax” on gasoline, because governments calculate sales taxes after all the per-litre taxes are added. This tax-on-tax costs Canadian drivers an extra 4.1 cents per litre of gasoline on average.

On April 1, Ottawa increased the federal carbon tax from 8.8 to 11.1 cents per litre of gasoline—the third time since the start of the COVID-19 pandemic—hiking taxes for drivers in Alberta, Manitoba, Ontario, and Saskatchewan, where the feds have imposed their own carbon tax.

In all other provinces, where carbon taxes are implemented by the provincial government, taxes have been raised since April.

On April 1, British Columbia raised its carbon tax from $45 to $50 per tonne, or from 9.9 cents to 11.1 cents per litre of gasoline, while New Brunswick and Newfoundland and Labrador both increased their carbon tax from $40 to $50 per tonne, or from 8.8 cents per litre to 11.1 cents per litre. Prince Edward Island raised its carbon tax from $30 to $50 per tonne, or from 6.6 cents to 11.1 cents per litre, on May 9.

Quebec and Nova Scotia have cap-and-trade carbon tax schemes, which charge less per tonne than the federal minimum carbon tax. This year, the carbon tax increased around 3.4 cents to 8.8 cents per litre in Quebec, and increased 1 cent to 2.3 cents per litre in Nova Scotia.

Prime Minister Justin Trudeau has pledged to further increase the carbon tax until it costs 37.6 cents per litre by 2030. His government is also planning to introduce a second carbon tax through what it calls Clean Fuel Regulations, which CTF said could add an extra 11 cents per litre by 2030.

By the end of the decade, Canadians are projected to pay a total of 96 cents per litre of gasoline in taxes alone, the CFT said.

“Taxes already cost Canadians big time at the pumps, and Trudeau’s two carbon taxes could soak drivers for nearly 50 cents per litre by 2030,” Terrazzano said. “It’s extremely tone-deaf for Trudeau to keep raising the carbon tax when Canadians can barely afford to fuel up their cars now.”