As motorists in Canada, we know that compared to our neighbours down south, we pay a lot for our gasoline. This is made even more astounding by the fact that British Columbia, Alberta, Saskatchewan and Newfoundland have oil. We are also the largest exporter of oil to the USA. No thanks to Keystone XL.
(A giant digger loads a mining dump truck in Alberta)
While this no doubt contributes to the countries prosperity, it is a bit of mystery why we pay so much more at the pump. I, the mighty bigbossyboss am here to explain that. With the help of some friends of mine at the Canadian Taxpayers Federation.
First a Disclaimer: I am in no way affiliated with said organization, I am not paid by them, I do not work for them, and my opinions are my own. I didn’t have to do anything at all. But being an Oppopotamus, I wanted to explain gas taxes, and the CTF is the most definitive source of info on this issue. I also really hate how 3% of my gas bill is taxes I am paying on taxes. How’s that song by YG go? Racks on racks on racks....tax on tax on tax....
Vancouver imposes the highest taxes and led April with the price being $1.25 per litre. Alberta and Manitoba brought up the rear with a price of $0.93 per litre. Contrary to what one might think, Alberta and Vancouver usually face the same per litre prices, often only varying 1-2%. The real difference is in the gas tax where Vancouver in total imposes a whopping 48 cent a litre tax, but Alberta only faces 27 cent a litre tax. Ontario, Canada’s most populous province and my home of the last 10 years came somewhere in the middle imposing 37 cents tax per litre. Using Ontario as an example let’s figure out how this all works.
The first calculation we need to make is to add our gas “price” (68 cents per litre in Ontario in April) and add the provincial and federal excise taxes. In ontario the excise tax is 14.7 cents per litre, but in each province it varies. Most provinces thankfully have one excise tax rate. BC has two depending on if you’re in Vancouver or Victoria or out in the sticks. The “sticks” pay 2x the provincial excise tax because the provincial government runs their transit. The “not sticks” only pay half that rate but then add their own transit taxes. Vancouver’s transit tax is 17 cents a litre, hence their high gas prices.
AND THEN THERE’S QUEBEC!!!!
(Pictured: Quebec city, Quebec. This would be where they thought of this wacky system)....
Quebec’s case is especially egregious. The provincial excise tax is 19.2 cents/L but if you live in a “peripheral region” it’s 4.65 cents per litre less. Then there’s “specific regions” where it’s 2.3 cents a litre less. Then there are also 5 other rates depending on how close you are to a peripheral or specific region. Got it? GOOD! Cause I sure as hell don’t...who the hell thought having no fewer than 8 different versions OF ONE DAMN TAX was a good idea?
Ok....ok...*breathes deeply*....back on track. We have taken our cost (68 cents/L and added our Ontario excise tax of 14.7 cents to come up with 82.7 cents/L.
Then we apply our Federal Excise Tax, which is 10 cents a litre throughout the country. Now we are at $92.7 cents per litre.
Then the best part of this whole shebang comes. We apply (provincial sales tax) and gst (federal sales tax) to the entire price up to this point. In ontario both the provincial sales tax and federal sales tax are harmonized and collected as “HST” at a rate of 13%.
So...yes...you pay 13% tax on not only the fuel price, but also the federal excise tax and the provincial excise tax. That would give us the price of $1.04.8 (one dollar 4 cents and 8/10th of a cent) per litre at retail price.
Of that, about 3 cents of that per litre price is simply you paying HST on taxes the government already imposed on you. Well you say, that’s stupid. But how much can motorists possibly pay in “tax on tax”? Oh. In aggregate it’s a lot.
For 2015 Canadians are projected to buy some 44 Billion, 700 Million litres of gasoline this year. That’s about 1000 litres each. All levels of government will split some $16 billion 626 million canadian dollars in revenue. Of that, the government will have collected about $1 billion 287 million in revenue which was solely sales taxes on other taxes the government imposes on us.
People always say there’s only two certainties in life, death and taxes. You can now add “taxes on taxes” as another certainty.
I hope next time you see your gas bill you are a bit more enlightened as to what is going on. The full report which I plagiarized with permission can be found here: It includes province by province break downs of the taxes on both diesel and gasoline. Let me know if you have any comments or concerns! Keep calm....and try not to buy gasoline in Vancouver if you can avoid it. It’s expensive there. :D