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Consumption Taxes

Federal Taxes

Federal taxes on gasoline and diesel fuel have remained unchanged during the recent period of price increases. The federal government excise tax on gasoline is 10 cents a litre, unchanged since 1995 and the excise tax on diesel is 4 cents a litre, unchanged since 1987.

In addition to the excise tax, the 7% Goods and Services Tax (GST) is imposed on all petroleum products. In the provinces of Newfoundland and Labrador, Nova Scotia and New Brunswick, the GST and the retail sales tax are replaced by a single Harmonized Sales Tax (HST) at a rate of 15%.

Furnace oil, natural gas and propane are exempt from the federal excise tax. Only the GST (or HST) applies.

Because the GST is ad valorem, the tax component is dependent on the price at retail. For example, in January 2005, when gasoline prices averaged 79.0 cents per litre, the GST accounted for 5.1 cents a litre and in August, when prices averaged about $1.00, the GST accounted for 6.5 cents a litre, an increase of just 1.4 cents.

Provincial Taxes

Provincial governments and some municipal governments also impose taxes on gasoline and other petroleum products. Provincial gasoline taxes range from a low of 6.2 cents a litre in Yukon to a high of 20.1 cents a litre in Prince Edward Island. Municipal taxes on gasoline range from 1.5 cents in Montréal to 6 cents a litre in Vancouver. Also, some provinces impose an additional sales tax on petroleum products.

Taxes on Alternative Fuels

Alternative fuels are exempt from the federal excise tax. In the case of ethanol and biodiesel for example, the ethanol and biodiesel portion of the fuels are exempt and propane and natural gas are also exempt. Some provinces also have exemptions of various amounts.

• Current Consumption Taxes on Petroleum Products – 2005
• Consumption Taxes – Automotive Use – 2005