How much tax are Canadians paying on gasoline?

Taxes make up a big chunk of the price of gasoline in Canada

Mark Atkinson
Published: June 3, 2016, 2:50 PM
Updated: June 15, 2018, 7:24 PM

How much tax?

On average, taxes account for more than one-third of the price of every litre of gasoline sold in Canada. ▲

Why don’t gas prices match crude price drop?

Over the past two years, the price of crude oil fell from a high of more than (US)$107/barrel to a low about (US)$26/barrel – a decline of more than 75%. Over the same period, the average retail price of gasoline in Canada fell by less than 40%. (All figures from GasBuddy.com) So why the difference? Why haven’t gasoline prices dropped as much as those for crude oil? ▲

Taxes make up a big chunk of price

There may be some additional profit taking along the way but the primary reason that gas price changes haven’t matched those of crude is fixed costs – those that stay the same or nearly so regardless of oil price. They include such things as refining, marketing and transportation costs – and taxes. Especially taxes! On average, taxes account for more than one-third of the price of every litre of gasoline sold in Canada. There’s a fixed Federal tax of 10-cents/litre everywhere but beyond that the figures vary dramatically depending on where in the country you buy your fuel. Here’s a summary of how much tax you’re paying on gasoline in each province, from lowest to highest, based on current retail prices for regular gasoline in that location (average $1.05/litre across Canada). Photo by Dan Heyman ▲

Alberta – 27.4 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.13; Sales Tax (GST) – 5.0% Current retail price - $0.922/litre; Total tax - $0.274/litre (29.7%) Alberta used to proudly proclaim the lowest provincial tax on gasoline in the country at only nine cents a litre. Its tax is still the lowest but when the NDP government was elected in 2015, it raised the rate to 13 cents a litre. With its low base cost for gasoline, the average retail cost of $0.922/litre for gasoline in Alberta is still among the lowest of any province, with taxes making up 29.7% of that price. Alberta is the driving force for Canadian oil: in the northern parts around Fort McMurray, not only removing the bitumen from the ground but also making it usable. There are four large refineries (Imperial oil, Shell Canada, Suncor, and fourth partnership) all clustered around Edmonton. There are also five ‘bitumen upgraders’, which makes the rough bitumen into the form of synthetic crude that can be sent through the massive network of pipelines before being further refined. Of those five upgraders, four are located in Fort McMurray and the fifth around Edmonton. The province’s wholesale pricing is tied to the markets in Chicago, IL, and is currently suffering the most from the current price of crude. Until global gas prices start to rise again and the extra cost of the upgrading the bitumen is covered, Alberta’s economy is hurting – a fact exacerbated by the dramatic effects of recent forest fires. Photo by Harry Pegg ▲

Manitoba – 28.7 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.14; Sales Tax (GST) – 5.0% Current retail price - $0.986/litre; Total tax - $0.287/litre (29.1%) Manitoba has the second-lowest fuel taxes in all of Canada at only 28.7 cents a litre. While Manitoba does produce around 40% of its own demand for oil through various fields and wells around the province, it does not have an oil refinery. That means it is forced to send the crude elsewhere to be refined or upgraded, and then brought back in for use. The majority of Manitoba’s reserves are similar in type to the oil sands in Alberta and Saskatchewan, although much smaller in scope. Also like its fellow prairie provinces, Manitoba looks to the Chicago market for its base pricing. Photo by Paul Williamson ▲

Saskatchewan – 29.5 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.15; Sales Tax (GST) – 5.0% Current retail price - $0.951/litre; Total tax - $0.295/litre (31.1%) Not surprisingly, as another oil-producing province, Saskatchewan has the third-lowest gas taxes in Canada at only 29.5 cents a litre. Most of the province’s oil action takes place near the Alberta side, including in the border-straddling community of Lloydminster. The only two synthetic crude upgraders (pictured here) are based there and owned by Husky Energy. Also fitting for the province that has a strong social bent politically, the province’s largest refinery, based in Regina, is still run as a co-operative. Like the other central provinces, Saskatchewan’s wholesale prices look to Chicago and the Midwest states for its cues. ▲

New Brunswick – 35.0 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.136; Sales Tax (HST) – 13.0% Current retail price - $0.994/litre; Total tax - $0.350/litre (35.2%) New Brunswick increased its gasoline tax by 1.9 cents a litre (to $0.136/litre) starting in April 2015, matching the rate in neighbouring Nova Scotia. However, because New Brunswick’s HST is two percent lower than Nova Scotia’s (13% vs 15%), the total amount is slightly less. New Brunswick takes its wholesale prices and influences from the daily WTI rating on the New York Mercantile Exchange (NYMEX), and because of the current moratorium on fracking doesn’t have any major oil production. However, the Irving Oil refinery in Saint John is the largest in Canada, with an output of 300,000 barrels a day, which feeds its own stations in the Atlantic provinces and into Maine. Most of the crude comes from places like Nigeria or Venezuela. The Irving family is pushing hard for the Energy East pipeline that would bring Bakken-grade crude from Alberta at a much lower cost per barrel than it pays for its current grades of Brent or WTI crude. ▲

Prince Edward Island – 35.8 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.136; Sales Tax (HST) – 13.0% Current retail price - $1.035/litre; Total tax - $0.358/litre (34.6%) Canada’s smallest province, both physically and in population, also has relatively small fuel taxes. At 13.1 cents a litre, it’s almost tied with Alberta for the lowest fixed tax, but its 14% HST rate forces pump prices much higher. PEI is one of only three provinces that doesn’t have an oil refinery, and imports all of its fuel from the two refineries left in Atlantic Canada. Photo credit: Melspei.ca ▲

Ontario – 36.8 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.147; Sales Tax (HST) – 13.0% Current retail price - $1.050/litre; Total tax - $0.368/litre (35.0%) Currently, Ontarians pay 36.8 cents per litre in total fuel taxes, which is a bit above the country average, but Ontarians are already griping about an additional 4.3 cents/litre gas prices that will take effect January 1, 2017 as part of Ontario premier, Kathleen Wynne’s carbon cap and trade initiative. Ontario is home to four large oil refineries, all clustered in the southwestern part of the province, but given the sheer size and population, they still aren’t enough to satisfy its needs. It takes its wholesale prices and influences from the daily WTI rating on the New York Mercantile Exchange (NYMEX). ▲

Newfoundland and Labrador – 38.5 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.165; Sales Tax (HST) – 13.0% Current retail price - $1.042/litre; Total tax - $0.385/litre (36.9%) Despite having several offshore oil platforms that supply it with crude, Newfoundland has some of the highest pump prices in the county. Its total tax rate only trails the provinces of BC, Nova Scotia and Quebec, and it’s about to get bigger. It’s fixed tax of 16.5 cents/litre is the highest in the country and on July 1, 2016, the provincial sales tax rate will rise by 2.0%, increasing the HST rate to 15.0%. Newfoundland’s refinery in Come by Chance, which is located on the Avalon Peninsula on Placentia Bay, is able to handle a modest 115,000 barrels of oil a day. And like the other Atlantic provinces, its market prices are valued on the NYMEX exchange. ▲

Nova Scotia – 38.9 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.155; Sales Tax (HST) – 15.0% Current retail price - $1.024/litre; Total tax - $0.389/litre (37.9%) Taxes in Nova Scotia currently total 38.9 cents a litre, the third-highest in Canada (second-highest as a percentage). The province was in the headlines last fall for a gasoline shortage, the result of both permanent and temporary refinery shut downs. The Imperial Oil refinery in Dartmouth was closed in 2013 and two fuel supply ships – one from the Gulf of Mexico, and another from Europe -- were both turned away in August and unable to offload their cargo for fuel quality reasons. Nova Scotia now imports 100% of its gasoline stock. Another factor to consider is that not all stations in the province have been properly converted to dispense the ethanol blend that’s refined and distributed by Irving in New Brunswick, thus limiting supply options. The E10 blend (10 percent ethanol and 90 percent gasoline) is harder on equipment, like hoses and seals, which have to be modified to operate safely. ▲

British Columbia – 43.1 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.145; Sales Tax (HST) – 11.67% Carbon tax - $.0667; Current retail price - $1.141/litre; Total tax - $0.431/litre (37.8%) British Columbia has the second highest taxes for fuel in the country at 43.1 cents per litre, in large part because of a 6.67-cent/litre carbon tax that no other province applies - yet. However, if in Metro Vancouver, there is an additional 11 cent city transit/carbon tax which raises that total to 54.1 cents per litre. The provincial capital of Victoria does something similar, although it is only 3.5 cents a litre, meaning a total of 46.6 cents. Much of BC’s wholesale price is influenced by west-coast American states. The province has two refineries: a Husky-owned one in the Vancouver suburb of Burnaby, and a Chevron refinery in Prince George, which is much farther north and well into the interior. Photo by Gerry Frechette ▲

Quebec – 43.5 cents/litre

Fixed Federal tax - $0.10; Fixed Provincial tax - $0.192; Sales Tax (QST GST) – 14.975% Current retail price - $1.100/litre; Total tax - $0.435/litre (39.6%) Quebec currently has the highest combined provincial fuel excise taxes in Canada with 43.5 cents tax in the price of every litre. Similar to Vancouver and Victoria, Montreal adds three cents a litre in addition to what the province charges. However, in remote communities away from population centres and at stations close to the US border, the province lowers the taxes it collects, to dissuade Quebeckers crossing over to find even cheaper gas in New York or portions of New England. Like Ontario, Quebec is tied strongly into the NYMEX and north-east US for its wholesale prices. Quebec’s two remaining refineries are each located close to its two largest cities; the one in Levis, which is located across the St. Laurence Seaway from the provincial capital, Quebec City, is the second-largest in Canada. It produces 265,000 barrels a day for owner Ultramar. ▲

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