New Year’s return of Alberta gas tax limited to 9 cents per litre

After a year of not having to pay provincial fuel taxes at the pumps, Albertans will be paying more for gasoline and diesel.

And were it not for a limit on the maximum fuel tax change, Albertans would be paying full freight.

On Tuesday, Finance Minister Nate Horner announced Albertans will pay only nine cents of the 13-cent fuel tax for the first quarter of the new year.

“The provincial oil price-based fuel tax relief program will be reinstated on Jan. 1, which means Albertans will continue to save money at the pumps,” Horner said in a statement.

Under the province’s affordability measures, the higher the average price of West Texas Intermediate (WTI) for the 20 trading days leading up to the 15th of the month preceding the start of the next quarter, the less fuel taxes Albertans have to pay.

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At the average price of US$79.99 or less, Albertans pay the full 13 cents per litre. Between US$80 and US$84.99, a nine cent tax is added per litre of fuel. Between US$85 and US$89.99, a 4.5 cent per litre tax is added. And at US$90 barrels, fuel tax collection is paused.

In the evaluation period, WTI prices were seen as low as US$68.22 and as high as US$79.43 per barrel.

According to U.S. Energy Information Administration data from the Federal Reserve Bank of St. Louis, WTI had an average price of around US$75 per barrel between Nov. 13 and Dec. 11.

There can only be a maximum of nine cents in increase of the gas tax between quarters to reduce price shock.

The Canadian Taxpayers Federation said it’s “mindboggling” that the province would reintroduce the fuel tax at a time of affordability crises.

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“With the Trudeau government hiking its federal carbon tax in a few weeks and with so many still people struggling to afford food and home heating, increasing the Alberta fuel tax is the wrong way for the Smith government to go,” Kris Sims, CTF Alberta director, said in a statement.

Sims called for another six-month extension on the gas tax holiday, given the recently-announced $5.5 billion in surplus and the cost of the fuel tax suspension running about $100 million per month.

“Manitoba’s NDP Premier Wab Kinew is fully suspending his fuel tax on Jan. 1, so do we want Albertans paying higher fuel taxes than in Manitoba?” Sims said.

Horner said the fuel tax was a predictable revenue for the province and helped offset volatility from other revenues.

“As a stable component of Alberta’s revenue mix, the fuel tax helps fund programs and services Albertans rely on while maintaining our significant tax advantage. The fuel tax relief program ensures we’re able to maintain strength in Alberta’s finances while continuing to support Albertans and Alberta businesses,” the finance minister said.