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July 2006 Backgrounder
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Province | Retail Price Excluding Taxes* | Provincial Excise Tax (flat rate) | Federal Excise Tax (flat rate) | Total GST | Provincial Sales Tax | Total Tax Component |
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St John’s (NFLB) | 69.0 | 16.5 | 10 | 5.7 | 7.6 | 39.9 |
Charlottetown (PEI) | 67.4 | 20.9 | 10 | 5.9 | N.A. | 36.8 |
Halifax (NS) | 66.7 | 15.5 | 10 | 5.5 | 7.4 | 38.4 |
Fredericton (NB) | 67.4 | 14.5 | 10 | 5.5 | 7.4 | 37.4 |
Quebec (QC) | 66.7 | 15.2 | 10 | 5.5 | 7.3 | 38.0 |
Montreal (QC) | 63.4 | 16.7 | 10 | 5.4 | 7.2 | 39.3 |
Toronto (ONT) | 65.6 | 14.7 | 10 | 5.4 | N.A. | 30.1 |
Winnipeg (MB) | 68.1 | 11.5 | 10 | 5.4 | N.A. | 26.9 |
Regina (SK) | 69.4 | 15.0 | 10 | 5.7 | N.A. | 30.7 |
Calgary (AB) | 68.2 | 9.0 | 10 | 5.2 | N.A. | 24.2 |
Kelowna (BC) | 73.4 | 14.5 | 10 | 5.9 | N.A. | 30.4 |
Vancouver (BC) | 66.4 | 20.5 | 10 | 5.8 | N.A. | 36.3 |
Victoria (BC) | 72.8 | 17.0 | 10 | 6.0 | N.A. | 33.0 |
Whitehorse (YK) | 87.2 | 6.2 | 10 | 6.2 | N.A. | 22.4 |
Yellowknife (NWT) | 81.0 | 10.7 | 10 | 6.1 | N.A. | 26.8 |
Canada Avg. | 66.0 | 14.5 | 10 | 5.4 | 2.0 | 31.9 |
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*Source : Fuel Focus (NRCan) – Tax components based on average retail gasoline prices (excluding taxes) for the first six months of 2006. |
In Canada, taxes comprise, on average, about one-third of the retail price of gasoline. This tax component is lower than in all other G7 countries, except the United States. The graph below illustrates this comparison.
Note : Values in Canadian dollars
Source: International Energy Agency
The GST was reduced to 6 percent from 7 percent, effective July 1, 2006, providing tax relief to Canadians across a broad range of purchases, including gasoline and diesel fuel. Based on retail fuel sales for 2005, the savings that will accrue to Canadian consumers on purchases of gasoline and diesel fuel are estimated at $230 million per year.
In addition, Budget 2006 confirmed the Government’s commitment to share gas tax revenues over this and the next three years to support environmentally sustainable infrastructure for cities and communities. (See table below for funding breakdown by year).
Table: Funding Profile for Gas Tax Sharing over Four Years
In thousands of dollars
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2006-07 | 2007-08 | 2008-09 | 2009-10 | Total |
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$600 | $800 | $1,000 | $2,000 | $4,400 |
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Source: Budget 2006 |
Some people question the way the GST is applied to gasoline and diesel fuel – i.e., as a "tax on tax" that includes provincial levies and federal excise taxes. However, this is inherent in the structure of the GST itself and is the norm for value-added taxation around the world.
Specifically, the GST applies to a broad base of goods and services and is calculated on the final amount charged for a good or service – including any federal, provincial or municipal taxes, levies or charges. This longstanding approach greatly simplifies vendor compliance and maintains the broad-based nature of the tax, so that it can be set at a relatively low rate.
The amount of GST from "tax-on-tax" is about 1.5 cents per litre for gasoline (calculated as 6 percent of the sum of the 10 cent federal and average 14.5 cent provincial excise taxes per litre of gasoline) and 1.1 cents per litre for diesel fuel (calculated as 6 percent of the sum of the 4 cent federal and average 14 cent provincial excise taxes per litre of diesel fuel). These amounts do not vary with price changes at the pump.
The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition so that all Canadians can benefit from competitive prices, product choice and quality service. The Competition Bureau oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.
The Competition Bureau concluded recently its examinations of high gasoline prices following Hurricane Katrina and allegations by independent retailers of predatory pricing and margin squeezing in the Canadian gasoline industry. The Competition Bureau found no evidence of a national conspiracy to fix gasoline prices.
Additional information on the gasoline pricing examinations conducted by the Competition Bureau is available online at www.competitionbureau.gc.ca.
Through Fuel Focus, Natural Resources Canada (NRCan) connects Canadians with the latest information on the price of oil and petroleum products such as gasoline. Current and factual information on price changes will help Canadians understand how the global petroleum markets affect their lives. Fuel Focus delivers:
The Fuel Focus website can be accessed through www.nrcan.gc.ca or at www.oppi.gc.ca.
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Last Updated: 2006-07-28 |