GOLDSTEIN: Stop hoarding windfall federal fuel tax revenues and give consumers a break now
· Toronto Sun
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Prime Minister Mark Carney should extend the federal fuel tax holiday at least to the end of this year because his government is currently hoarding billions of dollars in windfall revenues paid by Canadian taxpayers due to high oil prices.
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If he ignores this reasonable call to do so by Conservative Leader Pierre Poilievre, Ontario Premier Doug Ford and the Canadian Taxpayers Federation, the cost of gasoline will increase by 10-cents-a-litre and diesel fuel by 4-cents-a-litre on Sept. 8, the day after Labour Day.
A recent Leger poll by the Canadian Taxpayers Federation found 63% of Canadians surveyed oppose re-imposing the federal fuel tax in September compared to 25% in favour and 11% with no opinion.
Federal fuel tax temporarily suspended
Carney announced in April the Liberals were temporarily suspending the federal fuel excise tax from April 20 to Sept. 7 to help Canadians cope with higher gasoline and diesel prices resulting from the U.S. and Israel attack on Iran and the closing of the Strait of Hormuz.
At the time, the feds estimated this temporary tax holiday would result in a loss of $2.4 billion in government revenue.
But the federal government is currently raking in far more than that — multi-billions of dollars in added revenue — because of the 5% GST on fuel and higher corporate income taxes paid by the oil sector due to increased profits.
The reason for these windfall profits fattening the federal treasury is that the Carney government low-balled its expected revenues from higher oil prices in its spring economic statement in April.
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In it, as the CBC reported at the time, the government estimated the average price of a barrel of oil using the North American benchmark of West Texas Intermediate (WTI) would be US $73 this year.
In reality, WTI reached a high of US $119 per barrel in March and has averaged US $80 to $90 per barrel since the attack on Iran in February.
On Friday, WTI oil futures, even amid reports of another possible peace deal, were trading at US $78.18 per barrel, more than US $5 per barrel above the government’s estimate for 2026.
Making out like bandits on high oil prices
Given that every US $1 increase in the price of oil increases federal government revenues by an estimated $175 million to $200 million in Canadian dollars, the Carney government has been making out like bandits on high oil prices when it comes to fattening government coffers.
The Liberals even admitted in their spring economic update that their estimated US $73 average price per barrel of WTI this year was low-balled, saying they actually expect it will come in at US $80 per barrel.
The Liberals are setting themselves up for a “good news” budget in the fall when they will boast about their prudent fiscal management, more taxpayer-funded goodies and reduced deficits.
As Adam Chambers, the Conservative critic for international trade, told the CBC in April about this strategy with regard to oil prices:
“They’re trying to set the bar very low for themselves so they can jump over it very easily in the upcoming budget.”
Past Liberals famous for setting low bar
The Jean Chretien/Paul Martin Liberals of the 1990s and early 2000s were famous for this tactic — low-balling expected government revenues in their annual budgets so they could boast about their fiscal prudence in the next budget — to the point where their annual budget projections become laughable.
While the Chretien/Martin Liberals boasted they were excellent budgeters — and to be fair they did get ballooning federal deficits under control — an equally valid argument could be made they were terrible budgeters, incapable of telling Canadians the true state of federal finances from budget to budget.
In an open letter to Carney last week, Ford urged him not only to extend the federal excise fuel tax holiday to the end of this year, but to make it permanent, similar to Ontario’s decision in 2022 to temporarily reduce provincial taxes on gasoline by 5.7 cents per litre and on diesel by 5.3 cents per litre, which he later made permanent.
Poilievre called on Carney not just to extend the federal fuel tax holiday to the end of the year, but to remove all federal taxes on gasoline, including the GST and clean fuel standard for 2026.