Smith formally extends 'fuel tax suspension' to end of 2023

Since May 2022, Albertans have saved $1.5 billion to fuel their vehicles. Monday's extension will cost $520 million in uncollected tax revenue.

  • Rebel News
  • June 20, 2023
Smith formally extends 'fuel tax suspension' to end of 2023
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Alberta Premier Danielle Smith said the UCP will be extending their ‘fuel tax suspension’ to the end of 2023 — a move she hopes will make life more affordable for Albertans.

Under the relief program, residents save 13 cents per litre at the pumps. The premier said freezing gas taxes will save families $6 to $18 every time they fill up.

“Saving Albertans money when they fill up is Step 1 of this commitment,” according to Smith. 

“The UCP has a responsible plan for spending, growth and stability that allows the province to keep taxes low,” reads a May 11 press release.

In addition to extending the fuel tax suspension, the province pledged to cut taxes for all Albertans by introducing a new 8% tax bracket on income under $60,000 and permanently indexing personal income taxes.

“We will work daily to ensure that Alberta families can put more of their hard-earned money toward their essential needs,” said Smith.

Since May 2022, Albertans have saved $1.5 billion to fuel their vehicles. Monday's extension will cost $520 million in uncollected tax revenue.

The UCP earmarked the funding to combat inflation and address affordability challenges widely felt by residents despite oil trading below US$90 a barrel on the West Texas Intermediate (WTI).

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.

On May 3, Keean Bexte of The Counter Signal asked UCP MLA 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 [eliminating] 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.

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.

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.

In 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. Bank of Canada Governor Tiff Macklem confirmed the carbon tax increased 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,” said the premier.

In December, the UCP passed Bill 2, the Inflation Relief Statutes Amendment Act, providing $2.8 billion in relief for families, seniors and vulnerable Albertans over the next three years. 

The province suspended the 11.1 cents per litre fuel tax on gas and diesel at the time 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 savings of the fuel tax suspension is now 14.4 cents per litre.

On May 5, Rebel News asked the premier whether the UCP would extend the relief program into 2024. “We want to gauge it based on how our oil and gas prices are doing,” she said.

“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]. We wanted to make sure that people had certainty until the end of the year,” continued Smith.

“If prices go down, there will be some moderation.”

However, newly minted Finance Minister Nate Horner expressed 'cautious optimism' about Alberta's economy moving forward on Monday. “There are a lot of things happening in Alberta's economy that is good news for us,” he told reporters. “That's why we [can] do this today.”

In January, the Bank of Canada predicted 2023 would “not feel good” for taxpayers, with consumer spending expected to remain down this fiscal year. The rise in borrowing costs is expected to continue to strain many household budgets.

“Higher unemployment could undermine homebuyer sentiment and lead to a larger than expected drop in house prices,” said the central bank. “This, in turn, could reduce household wealth, access to credit, and consumer confidence.”

In June, they raised interest rates a quarter percent to 4.75%. Earlier this year, the bank forecasted inflation and interest rates would remain above pre-pandemic levels well into 2024. 

Alberta is set to release its first-quarter report of the fiscal year at the end of August. They pledged to evaluate the relief program every economic quarter based on the price of oil.

Alberta Canada Carbon Tax Alberta Legislature Danielle Smith
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