Many of Canada’s economists must be scratching their heads trying hard to follow the Trudeau/Singh marriage that seeks to overturn economic concepts by “Building Back Better” or via “The Great Reset”!
The basic premise; from the writer’s perception, seems to be; by further taxing fossil fuels they will create utopia eliminating its use and the future will see us all using only clean, green electricity. In order to achieve their goal, increasing taxes for using fossil fuels will not only create those “green” jobs and eliminate poverty but will also save the planet as we (Canada only) aim to achieve net-zero emissions.
Taxes (Levies) Imposed on Fossil Fuels
Natural Resources Canada have posted a chart referenced as “Fuel Consumption Levies in Canada” which sets out what should be called taxes as they simply raise the price of the fuel(s) for the benefit of the Federal and Provincial governments. The page is inclusive covering those “levies” for: gasoline, diesel, propane (motor vehicle), furnace oil and natural gas (for heating). The chart also includes the 2021 Federal and Provincial “Carbon Levies”. Funnily enough “biomass” and coal are not included in the chart, however, interestingly enough Canada is one of the 120 members of the “Powering Past Coal Alliance” and has committed “$275 million to the World Bank in December 2018 to create the Energy Transition and Coal Phase-Out Program.” Your tax dollars at work somewhere else in the world!
Annual Taxes (Levies) on Natural Gas
According to CIEC Data Canada’s average consumption of natural gas “was reported as 10.868 Cub ft/Day bn in Dec 2020”. That translates to 11,466.35 gigajoules and for a full year is just under 4.2 million gigajoules. Based on the current levy referenced as the Federal Carbon Charge the tax (Levy) would generate approximately $10.4 billion per annum. On a personal basis I noted on my latest natural gas bill: the Federal Carbon Charge (tax) was 45.7% of the “Gas Supply Charge” and coupled with the HST total taxes represented 80.3% of the cost of the natural gas our household consumed.
In the future we should wonder; how will the Federal and Provincial governments replace that $10.4 Billion of taxes/levies?
Annual Taxes (Levies) on Gasoline and Diesel Fuel
The number and amount of taxes and levies on gas and diesel fuel is mind-blowing and include; Federal Excise Tax, provincial fuel tax which can vary within each province (highest is Vancouver, BC at 27.5 cents/litre and lowest is the Yukon at 6.2 cents/litre), the carbon tax and of course, the PST and GST either combined (HST) or individual (Quebec).
So, lets look at the revenue those numerous taxes/levies generate annually from their consumption to get us to work and back, take our kids to school and to move goods and services across our very large country.
As it turns out the most recent information of consumption Statistics Canada posted is for 2020 which was the first year of the Covid-19 outbreak. The Covid outbreak created lockdowns, business and school closures, etc. and as a result our consumption of gasoline and diesel fuel fell from 2019. Gasoline consumption fell by 13.8% from 44.8 billion litres to 38.6 billion litres and diesel fuel consumption fell from 17.8 billion litres to 16.2 billion litres or 8.9%. Despite the drop in consumption the taxes/levies funds rolled into the Federal and Provincial coffers.
Based on the taxes levied if one does a simple calculation using fifty cents a litre (.50 cents/litre) which is approximately what they would be in Ontario one discovers those 38.6 billion litres would have generated approximately $19.3 billion from gasoline sales. Diesel taxes are slightly higher so at fifty-two cents a litre (.52cents/litre) the 16.2 billion litres would have generated about $8.4 billion. Collectively gasoline and diesel sales contributed around $27.7 billion dollars to Federal and provincial revenues.
Once again how will the provincial and Federal governments replace that $27.7 billion of taxes/levies they collected and spent?
Provincial kickbacks due to high fossil fuel costs
As if to make the potential drop in taxes more acute a few provinces have kicked back some of their taxes/levies as a response to the costs associated with fossil fuel consumption as the price of both gasoline and natural gas climbed to record levels. Ontario has dropped license fees no matter if you drive an EV (electric vehicle) or a vehicle labelled as an ICE (internal combustion engine) saving vehicle owners $120 per year. That will result in lost revenues of almost $1.1 billion annually based on over 9 million vehicles registered in the province. Alberta has dropped it’s .13 cents/litre fuel tax until the price of WTI (West Texas Intermediate) drops below $80/barrel! BC’s Premier Horgan, said vehicle owners insured with ICBC (a provincially owned monopoly) will be receiving $110 each to “relieve the pain at the pump” which should result in approximately a $400 million payout. What the foregoing suggests is those three provinces will be short of about $2 billion plus during the current year. As we get closer to the complete elimination of fossil fuel use to drive our ICE cars or to heat our homes, we should expect these kickbacks to disappear due to the billions of taxes/levies that will be lost along with the jobs they support.
The foregoing implies the Federal and Provincial Governments will miss the almost $40 billion dollars annually extracted from taxpayers for using fossil fuels! The $40 billion doesn’t even include the billions coming directly from the fossil fuel companies or the income taxes from those they employ!
Maybe it doesn’t make economic sense to raise taxes to eliminate taxes! Perhaps it’s time for many of our politicians to take an economics course or spend a little time with some of those impacted by their efforts to achieve “net-zero”!
Parker Gallant Energy Perspectives 
Scientifically illiterate politicians need to familiarize themselves with the Gas Law:
PV=nRT. There is no “greenhouse” effect by gases, as proven by measured balloon data.
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The average income tax and royalty revenue received by federal and provincial governments over the most recent five years for which data is available is about $10 billion per year. That figure is much lower that the average in the pre-2015 period. With oil prices considerably higher this year, it would not be surprising for income taxes and royalties to yield $13 billion in government revenues. Still, as Parker points out, the revenues collected from consumers on the sale of refined oil products far surpasses the revenues collected from crude oil. When people hear about the alleged “subsidies” to oil and gas they should bear these numbers in mind. By the way, just try to find out how much governments collect in tax revenues from the production and sale of wind, solar and biomass energy. I have never been able to find any data at all, which suggest that the numbers are very low.
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