Island drivers caught a break at the pumps this spring. Next month, the Carney government plans to take it away.
Prime Minister Mark Carney suspended the federal gas tax in April. That saved drivers 10 cents per litre on gasoline and four cents per litre on diesel.
For an Islander filling a 64-litre tank, that’s a saving of more than $6 every trip to the pumps. Fill up once a week and that adds up to more than $300 a year.
But the relief came with an expiry date. The federal government plans to hike the tax back up on Sept. 8, right as families face back-to-school bills.
That’s the wrong move. And Islanders know it.
The Canadian Taxpayers Federation released Leger polling showing 64 per cent of Atlantic Canadians oppose the federal government hiking the gas tax back up. Among those decided on the issue, 72 per cent are opposed. Only six per cent of Atlantic Canadians strongly support the hike.
It’s not hard to see why.
Even with the federal tax suspended, taxes make up 22 per cent of the price at the pumps in P.E.I., according to the CTF’s 28th annual Gas Tax Honesty Report. Drivers pay about 39 cents of tax on every litre of gasoline. That means a typical fill-up costs about $25 in taxes alone.
Here’s the breakdown. The provincial fuel tax takes 8.5 cents per litre. A second carbon tax hidden in federal fuel regulations adds seven cents more. Then both governments charge sales tax on top of the whole thing.
That sales tax hides the sneakiest grab of all: tax-on-tax. The HST is charged after every other tax is added to the price, so drivers pay about three cents per litre in tax on their taxes.
Those taxes hit hardest for the people who can least afford them: seniors on fixed incomes, students commuting to class and parents stretching every paycheque to cover the grocery bill.
If Carney’s hike goes ahead, the total tax bill jumps past 49 cents per litre. The hike hits diesel too, driving up the cost of trucking food to every grocery store shelf in the province.
Carney should cancel the hike. But Ottawa isn’t the only government that owes Islanders drivers relief.
Premier Rob Lantz hasn’t cut P.E.I.’s fuel tax, even as other provinces gave their drivers a break. Newfoundland and Labrador cut its gas tax by eight cents per litre in 2022 and made the cut permanent in March. Ontario made its 5.7-cent cut permanent last year. Those governments understood their drivers needed a break. Lantz should too.
Lantz can afford to do the same. His government hands out about $295 million a year in corporate welfare. The provincial gas tax brings in about $28 million a year. Lantz could scrap the entire gas tax and still save money by ending handouts to businesses that don’t need them.
Cutting the gas tax wouldn’t mean cutting services. It would mean Islanders keep more of their own money.
That matters in a province where driving isn’t optional. A plumber in Summerside can’t haul tools on a bus. A father in Cornwall can’t fit his kids’ soccer bags on a bike.
Islanders drive because they have to and every one of those trips gets taxed.
Politicians like to claim they can’t afford to cut taxes, but the truth runs the other way. Families in P.E.I. can’t afford the taxes.
Carney needs to cancel his September gas tax hike. Lantz needs to cut P.E.I.’s fuel tax and stop charging tax on tax. Islanders deserve relief at the pumps, not another grab at their wallets.
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Franco Terrazzano
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