Fuel tax break comes into effect as Albertans struggle with high prices at the pump

Alberta’s pause on its provincial fuel tax has come into effect, meaning the government will not collect the provincial tax of 13 cents per litre of gasoline or diesel until at least June 30.

It will apply for as long as the average price of West Texas Intermediate (WTI) — considered the global benchmark price for oil — remains above $90 US per barrel. The price of WTI was hovering around $100 US on Friday.

“Alberta’s government has listened to Albertans saying we need to take real action to reduce the cost of living,” Premier Jason Kenney said during a press conference Friday.

The premier also criticized what he called the “Liberal-NDP” federal carbon tax, which increased Friday to $50 per tonne of emissions, which translates into a spike of 2.21 cents per litre of gasoline.

Last week, Kenney, along with Saskatchewan Premier Scott Moe and Manitoba Premier Heather Stefanson, wrote to the federal government to request a pause on the increase.

In a letter posted to Twitter on Friday, federal Natural Resources Minister Jonathan Wilkinson wrote that it was important that “such discussions are informed by facts and evidence.”

“The truth is that 94 per cent of the price of gas has nothing to do with the price on pollution,” Wilkinson wrote. “The vast majority of the price increase that Canadians are seeing right now is driven by crude oil prices going up — largely because of Russia’s illegal invasion of Ukraine.”

Jonathan Wilkinson, the federal natural resources minister, wrote a letter saying that the government’s carbon pricing system is widely recognized by experts as being one of the best ways to fight climate change. (Adrian Wyld/The Canadian Press)

Wilkinson said that some families may actually get more money back than they pay under the pricing policy, estimating that number at eight out of 10 families.

Environment and Climate Change Canada estimates that a family of four in Alberta would receive $1,079 in 2022-23 in federal tax-free Climate Action Incentive Payments.

Families in Alberta are expected to receive those payments quarterly, with the rebates coming in April, July, October and January.

Alberta’s provincial government has stated concern that the scheduled increase could further increase inflation, which is already at a 30-year high.

During Friday’s press conference, Kenney cited a recent study from the Parliamentary Budget Office, Canada’s fiscal watchdog. That report concluded that the federal carbon price would lead to a “net loss” for most households in provinces with the backstop, with larger net costs for those households with higher incomes.

The federal government, meanwhile, says serious climate action needs to be taken now to mitigate the devastating impacts of climate change.

Fuel tax details

Along with the suspension of provincial fuel taxes, the Alberta government will also provide $150 electricity rebates to retroactively help residents hit by high bills this past winter.

Those rebates will be provided to more than one million homes, farms and businesses, doled out over three months in sums of $50 and applied directly to electricity bills.

Premier Jason Kenney spoke about a pause in collecting provincial fuel taxes while at a press conference held at a Co-op gas station in Calgary on Friday. (CBC News)

NDP energy critic Kathleen Ganley said she had been asking how the provincial government’s pause on the gas tax would be passed on to Alberta families and not be swallowed up by retailers.

“I’ve been getting messages from Albertans all morning who aren’t seeing price relief at their local gas station. One thing we all know about gas prices is that they move around continuously,” Ganley said during a news conference.

“We have called for a third-party audit to demonstrate whether the savings were actually passed on to Albertans for the duration of the program. Predictably, the UCP has refused to do this.”

During the government press conference, Alberta Finance Minister Travis Toews said the province would “cross that bridge when we come to it.” 

“We’ll continue to monitor, but I have every reason to believe that in this competitive market, retailers will be passing these savings on,” he said.

NDP energy critic Kathleen Ganley says even in a ‘best-case scenario,’ the pause on the provincial fuel tax won’t do enough to provide relief to ‘the huge new costs the UCP [budget] has piled on Alberta families and Alberta businesses.’ (CBC)

The province said it would consider the future of the fuel tax pause based on a sliding scale of the price of WTI crude.

The provincial government previously announced a natural gas rebate intended to help consumers deal with natural gas bills.

That would come into effect should regulated natural gas companies charge rates above $6.50 a gigajoule between October 2022 and March 2023 to consumers using less than 2,500 gigajoules annually.

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