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Alberta extends fuel tax pause until end of the year

Premier Danielle Smith announced an additional six-month pause—up to December 31, 2023—on Alberta’s 13 cent per litre fuel tax.

The Premier said that the move was meant to continue to provide affordability to Alberta, and to fulfill a political promise made by the United Conservative Party during the election.

“We are keeping our promise to Albertans by suspending the collection of the provincial fuel tax for another six months, and ensuring that you continue to save the full 13 cents per litre when you fill up at the gas station,” she said.

“Pausing the fuel tax on gasoline and diesel for the rest of the calendar year will put hundreds of millions of dollars back into the pockets of Albertans.”

The move is expected to reduce government revenues by approximately $520 million over the next six months.

The pause on the provincial fuel tax was announced by former Premier Jason Kenney on April 1, 2022, and extended in January of this year.

The Alberta Government said that the pause had resulted in $1.5 billion less in taxes being paid.

The tax freeze was criticized in January after consumers saw higher gasoline costs at the pumps, going from between $1.09 to $1.15 per litre pre-holiday season to $1.35 per litre after.

Currently, according to the daily gasoline pump price survey done by Kalibrate, the average price in Calgary is $1.44 per litre, $1.395 in Red Deer, and $1.387 in Edmonton.

Premier Smith said that the province would continue to monitor gas station prices, to ensure that the tax savings would continue to be passed on to consumers.

“Alberta has the ability to enact consumer protection fines if the companies are gouging,” she said.

She said that she had confidence that Minister of Red Tape Reduction, Dale Nally, would continue to address pricing with companies.

Smith said that the tax, when it is renewed, would be phased in as gradual increases.

The government said that in 2024, the fuel tax would be tied to WTI prices. The full 13 cents would be charged when WTI is $79.99 or less, 9 cents when WTI is between $80 and $84.99, 4.5 cents when WTI is between $85 to $89.99, and zero when WTI is over $90.

Promise made, promise kept says UCP

Alberta's Minister of Finance, Nathan Horner, said that it was important to fulfill the campaign promise made by his party, given the ongoing affordability crisis.

"This measure specifically has been as it has been considered one of the main reasons we've been able to keep inflation lower here than anywhere else in the country," Minister Horner said.

He asked that Albertans wait till August for the government's fiscal update to be provided, and to trust the government that revenue not generated from the fuel tax would be covered by "cautiously optimistic" fiscal outcomes.

Alberta's consumer price index (CPI) has generally been the highest in the nation over the past three years. CPI in Alberta fell from October 2022 to February 2023, dropping below Prince Edward Island, before rising again in April to be the highest in Canada according to Statistics Canada.

In terms of inflation growth, Alberta was slightly below the Canadian average of year-over-year growth of 4.4 per cent for the nation, with 4.3 per cent according to the Government of Alberta's own statistics, but ahead of Ontario, PEI, and Newfoundland and Labrador.

With energy costs removed from the CPI calculation, year-over-year inflation rates for the province in April were 5 per cent. Energy was down by 3.9 per cent, with food up by 8.1 per cent, health care up by 4.7 per cent, and rent up by 3.5 per cent.