A Jack Mintz article in the Financial Post about the various “fuel taxes” inspired some research on how much taxes Canadians are burdened with in respect to the fuels consumed to bring goods to the stores, get us to work, manufacture products, used in agriculture and for food processing, etc.etc.
Most individuals are probably unaware how many variable taxes are applied by both the Federal and Provincial governments and how the layered effect creates a tax-on-tax situation we taxpayers absorb regardless of whether we bike to work or walk to the grocery store for our daily or weekly needs.
A short list includes: the “excise tax” (averaged at 10.5 cents/litre), the “carbon tax”* (currently at 11 cents/litre) and either the HST (harmonized sales tax) or the PST (provincial sales tax) plus the GST (federal general sales tax). The latter ie: “sales taxes” are applied to the final price after all the prior taxes are included on your purchase so, apply taxes-on-taxes, for both the excise and carbon tax. Please note I used 13 cents/litre as the average, with Alberta being the one exception as they have no sales tax.
The Feds and Provinces love high Gasoline and Diesel Prices
For some time I’ve wondered why no one has looked at the big picture with gas and diesel prices more than double what they were. Running the numbers based on what Statistics Canada reported we used for gasoline and diesel consumption for road vehicles and what diesel fuel is consumed for our railway industry for 2020 was targeted! Interestingly the only government who offered a break by reducing taxes while prices increased was Alberta, where the current Provincial leader Jason Kenny agreed to eliminate their portion of the excise tax. Alberta is also the only province without a sales tax. The Ontario Ford led government has promised to cut sales taxes by 5.7cents/litre if elected starting July 1st, 2022 but we don’t know yet if that will actually happen.
I did a quick calculation on the fuel tax costs using an average of annual gasoline and diesel fuel sales from the Federal Government’s website(s) to determine how much more we pay annually now, versus prior to the doubling of pump prices!
For gasoline sales I used an average of 44 billion litres annually (6.4 billion litres consumed in Alberta was deducted from sales tax revenue calculations) as the years prior to the Covid-19 pandemic averaged above that consumption level. Alberta doesn’t have a provincial sales tax but the other taxes apply as they are federal not provincial.
For gasoline priced at $1/litre total costs including all taxes the total annual bill comes to $53.178 billion. That includes taxes of $15.578 billion with the latter broken down as $11.660 billion in Federal taxes and $3.918 billion in provincial taxes.
For gasoline priced at $2/litre the total costs including all taxes amounts to $95.666 billion with taxes of $20.466 billion and the latter broken down to $13.220 billion in Federal taxes and $7.246 billion in provincial taxes.
For diesel sales from Statistic Canada the average used was 17.5 billion litres annually for “road motor vehicles” (3.6 billion litres consumed in Alberta was deducted from sales tax revenue calculations) plus an additional 2.1 billion litres of diesel used for the railway industry as per Statistic Canada.
For diesel priced at $1/litre the total costs including all taxes amounts to $28.330 billion including taxes of $5.790 billion with the latter split into $4.280 billion in Federal taxes and $1.510 billion in provincial taxes.
For diesel priced at $2/litre the total costs including all taxes amounts to $50.484 billion including taxes of $8.344 billion with $5.264 for the Federal coffers and $3.080 for the provincial tax kitty.
So, if we combine taxes for the $1/litre costs of both gasoline and diesel we can see total costs of $21.568 billion and at $2/litre combined federal and provincial taxes grows to $28.810 billion and is a year-over-year increase of $8.344 billion or 40.7%.
The $8.344 billion extracted from the taxpayers pockets by the Federal and Provincial governments clearly has had a negative effect on every Canadian household as it extracted our after-tax dollars and raised the cost of everything we consume. Those costs include simple things such as delivery costs added to the price of food to feed families and no doubt helped drive more households into energy poverty.
Oh, and less we forget, we also pay sales taxes (Federal and Provincial) for other necessities of life like electricity to keep the lights on and energy to heat our homes and keep us from freezing in Canada’s cold winters.
One should note the Bank of Canada has not noticed this inflation issue but bragged a few months ago about how they had “reduced electricity use in our head office by 50 percent—the equivalent of removing over 1,300 homes from the electricity grid.” One assumes they used our tax dollars to achieve the above reduction while ignoring inflation caused from increased taxes affecting each and every Canadian household.
The Bank of Canada will have caused “energy poverty” in many more than the 1,300 homes their “reduced electricity use” reputedly saved by ignoring how tax policies of the Federal and Provincial governments are negatively affecting Canadian families and businesses!
NB: For the sales taxes (federal [5 cents/litre] and provincial [8 cent/litre]) the average used was 13% combined and 10.5 cents/litre for the excise tax for gasoline and 4 cents/litre for diesel and for both a carbon tax (as at April 1, 2022) of 11 cents/litre.
*Scheduled to increase from $50/ton to $170/ton by 2030