Fuel tax relief program extended until end of year, Alberta premier says

Alberta’s United Conservative Party government says it’s sticking to its campaign promise to extend the fuel tax relief program until the end of the year.

Premier Danielle Smith says the program, which saves Albertans 13 cents per litre at the pumps, was set to expire at the end of this month.

The pause on the provincial fuel tax was first announced by former UCP premier Jason Kenney in 2022.

According to the Alberta government, the fuel tax saved Albertans $1.5 billion since it started.

1:58 Alberta government’s 6-month suspended fuel tax now in effect

Smith says although the West Texas Intermediate benchmark oil price has been below US$90 a barrel, Albertans continue to face affordability challenges due to inflation.

Finance Minister Nate Horner says extending the program is to cost $520 million, but the government is cautiously optimistic about Alberta’s economy.

0:55 Danielle Smith confident price of gas will stay high enough to fulfill her spending promises

The government is set to release its first-quarter report of the fiscal year at the end of August.

“There are a lot of things happening in Alberta’s economy that is good news of us,” Horner said at a news conference Monday.

“That’s why we are able to do this today.”

1:42 UCP government eliminating Alberta fuel tax

But the fuel tax hike comes at a cost: the province said it also lost $1.5 billion in revenue.

Public Interest Alberta said it is concerned about the fuel tax pause because it could be generating revenue for services like education and health care.

“Ironically it’s contributing to the lack of revenue that we will need in the long term when we don’t have surpluses to pay for things that we really need like public education and health care,” said Public Interest Alberta in a statement to Global News.

University of Alberta economist Chetan Dave said there are better ways to address the affordability crisis. Reductions in personal income tax are a more effective solution, he said.

“They’re a little bit gimmicky. I don’t view conducting our provincial government finances, based on these sorts of measures to be sensible in the medium or long-term, in terms of our provincial fiscal health,” Dave said.
“Is it something that makes holistic sense in terms of our budget in the short, medium or long term? I don’t think so … I think it’s better to give people reductions in their personal income tax and things of that nature in order to help them out on a more sustainable basis versus a short-term fix.”

–With files from Carolyn Kury de Castillo, Global News.