Alberta won’t follow suit as federal Liberals temporarily pause gas tax

Alberta Premier Danielle Smith says she won't follow Mark Carney's decision to excise the federal gas tax.

Mark Carney’s newly elected Liberal majority government and Alberta are split on their responses on how to help drivers save on oil costs as the war in Iran drags on.

Carney announced on Tuesday — hours after securing a majority government through three byelection wins — that he will scrap the federal excise tax on gas and diesel for the summer.

The move would possibly save drivers up to 10 cents per litre.

Alberta Premier Danielle Smith, meanwhile, plans to wait for the outcome of a funding formula her government has in place that determines how much of the province’s fuel tax will be removed, based on the price of oil per barrel.

The province currently charges 13 cents per litre in taxes on gasoline at the pumps.

Smith says the earliest that levy could come off would be Canada Day.

“If we do have a quarter where the oil prices are above $90 for a period of time, then as of July 1, that fuel tax will come off completely,” Smith said during question period in the Alberta legislature on Tuesday.

“We want to make sure that the program is enacted the way it was meant, that if we have surplus and windfall revenues, a portion of those will be returned to taxpayers.”

Alberta Finance Minister Nate Horner’s office says Alberta has one of the lowest taxes on fuel.

“We understand that when costs go up at the pumps, Albertans can feel that pressure on their wallets,” said senior press secretary Marisa Warner.

The price of oil on Tuesday sat around $92 US a barrel.

Alberta Opposition NDP Leader Naheed Nenshi has been calling on Premier Danielle Smith’s United Conservatives to drop the levy, since the military conflict in the Middle East sent energy costs soaring.

Nenshi says the province needs to be more nimble in the face of extraordinary price fluctuations but that it appears to be padding its pockets with royalty revenues while Albertans struggle.

Ten cents of relief from Ottawa

According to Ottawa, the temporary tax suspension is expected to reduce the cost of gas by 10 cents per litre on regular gas and four cents on diesel.

“When Canadians are facing financial pressures, they carefully manage their expenses, and they expect their government to do the same,” Carney told reporters in Ottawa on Tuesday.

The suspension comes into effect on April 20 and will last until Sept. 7. It comes as global oil prices remain volatile amid U.S.-Iran tensions.

As a result, the average price of gas in Canada has surged by more than 40 cents per litre in certain regions.

Some experts say Carney’s savings provide only limited relief.

“If the average prices in Canada have gone up, give or take around 40 cents a litre, and 10 cents is coming back at you, there’s only 25 percent of the problem,” said Concordia University economist Moshe Lander.

“It’s assuming that nothing further is going to happen in the coming months between now and labour day.”

The Canadian Taxpayers Federation says the temporary pause is a relief for many, but it needs to be made permanent.

“At least he’s (Carney) providing some relief. The Alberta government has to cut gas taxes as well,” said CTF President Franco Terrazzano.

Terrazzano adds that Alberta must now eliminate its portion of taxes on fuel instead of waiting for its formula to kick in.

“They are trying to use long division as a reason why they’re not cutting taxes. But, look, Albertans are struggling with how expensive everything is. Albertans want tax cuts, and the Alberta government needs to make that happen.”

Since 1995, the federal government has charged an excise tax on gas at a flat rate of 10 cents per litre, while diesel has been taxed at four cents per litre since 1987.

— with files from CTV’s Stephanie Ha and The Canadian Press