Premier Danielle Smith and the Alberta UCP extended the fuel tax suspension on May 11 in a pledge to make "life more affordable" for Albertans.
"The UCP has a responsible plan for spending, growth and stability that allows the province to keep taxes low," reads a UCP press release. "A UCP government would provide stability by ensuring the economy stays strong, life remains affordable, and streets and communities are safe."
In addition to cutting taxes for all Albertans by introducing a new 8% tax bracket on income under $60,000 and permanently indexing personal income taxes, the Alberta government pledged to suspend the fuel tax until the end of the year.
"Should the UCP secure re-election on May 29, could the party look at extending the fuel tax suspension until the end of 2024, given the Bank of Canada said inflation will continue to be a problem, and given the federal government will increase the carbon tax next April?" Rebel News asked Smith at a press conference last week.
"We want to gauge it based on how our oil and gas prices are doing because part of the reason for the fuel tax reprieve is as prices are high, we get more revenues, which gives us the revenue needed to offset an increase in [fuel taxes]," she replied.
Bill 2, the Inflation Relief Statutes Amendment Act, provided $2.8 billion in relief for families, seniors and vulnerable Albertans over the next three years. Notably, the province suspended the 11.1 cents per litre fuel tax on gas and diesel by amending the Fuel Tax Act from January 1 to June 30, 2023.
On April 1, 2023, Ottawa increased the carbon tax to $65 per tonne with successive increases until 2030, reaching $170 per tonne. The cost of the fuel tax is now 14.4 cents per litre.
"We wanted to make sure that people had certainty until the end of the year, and, if re-elected, we've already demonstrated that we are prepared to act quickly if there is an affordability issue we need to address," added Smith. "If prices go down, there will be some moderation."
According to the Bank of Canada (BoC), 2023 is "not going to feel good" for taxpayers.
In a Monetary Policy report, the central bank forecasted inflation and interest rates would remain above pre-pandemic levels well into 2024.
"Higher unemployment could undermine homebuyer sentiment and lead to a larger than expected drop in house prices," said the report. "This, in turn, could reduce household wealth, access to credit, and consumer confidence."
According to the BoC, consumer spending is expected to remain down through much of 2023. "The rise in borrowing costs is expected to continue to strain many household budgets."
Statistics Canada's latest consumer price index unveiled grocery prices soared precipitously last December over one year. Grocery prices rose 9.8%, marking the fastest pace since 1981.
Rising energy prices contributed significantly to high inflation last year, as consumers paid 28.5% more for gasoline in 2022 annually. However, according to the federal agency, Canadians spent 13.1% less at the pumps than in November, with crude prices dropping as concerns of a global recession near.
Last November, Smith called for Ottawa to revoke their planned tripling of the carbon tax by 2030, which has already contributed to higher inflation and borrowing costs for Albertan households. Macklem confirmed the carbon tax bolstered inflation by 0.4%.
"It's to make life more painful for the poor and the powerless, and with that tax set to go up again in the middle of winter, when inflation is eating more and more into your hard-earned dollars," she said.
On Wednesday, Keean Bexte of The Counter Signal asked UCP Candidate Devin Dreeshen how quickly grocery prices and utility bills would fall if a new federal government revoked the federal carbon tax.
"[CPC leader Pierre] Poilievre came to my riding a few weeks ago and committed to getting rid of the carbon tax. It doesn't just hurt our bank account, or when we buy groceries or fuel up our vehicles or heat our homes, it hurts our international competitiveness," he said.
Albertans will pay nearly 40 cents in carbon tax per litre of gas or diesel in 2030, with total fuel taxes amounting to 67.8 cents per litre then.