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Governments Can and Should Cut Gas Taxes Today

The Canadians Taxpayers Federation’s analysis shows that the gas tax relief proposal from Conservative Party leadership candidate Pierre Poilievre is possible and can happen immediately.

“Poilievre is right that Ottawa can make life more affordable today by cutting the big tax bill we pay at the pumps,” said Franco Terrazzano, Federal Director of the CTF. “The proposed tax cuts would save drivers more than $20 every time they fuel up their family minivan.”

Poilievre proposes to scrap the federal carbon tax and suspend the federal fuel tax and sales tax on gasoline. The CTF’s analysis shows that this would save drivers in Ontario nearly 30 cents per litre of gasoline, or more than $20 every time a family fuels up their Dodge Caravan.

Taxes account for up to 38 per cent of the pump price in Canada.

The federal government and some provinces calculate sales taxes after all the per-litre taxes are added. This tax-on-tax costs drivers an extra 4.1 cents per litre of gasoline, on average.

While the federal government has increased its carbon tax three times during the pandemic, other jurisdictions have cut fuel taxes, including: South Korea, Germany, the Netherlands, Israel, India, Indian states and territories, Ireland, Poland, Italy, New Jersey and Alberta.

“Other countries are cutting taxes to make life more affordable while Ottawa continues to stick Canadians with higher bills,” said Terrazzano. “With inflation ballooning government coffers, there is no reason Prime Minister Justin Trudeau can’t cut gas taxes to help Canadians afford fueling up their cars on the way to work.”

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