Alberta to stop collecting provincial gas tax, offer electricity rebate to offset high energy prices

The Alberta government will stop collecting its fuel tax at the start of April and plans to offer a $150 electricity rebate in an effort to help Albertans deal with rapidly rising fuel and energy costs.

Alberta Premier Jason Kenney made the announcement on Monday, calling it a “bold decision” that gives “real relief.”

“This is a fiscally responsible measure that will only provide this relief if, in fact, the province is generating significantly additional revenues,” Kenney said.

“All together this helps us to address cost pressures that are making life harder.”

The provincial gas tax amounts to 13 cents per litre of gasoline and diesel and would not be collected as long as the cost of West Texas Intermediate remains above US $90.

When WTI is priced below US $80 the provincial gas tax would return.

The tax will be collected at 4.5 cents per litre when WTI is priced between US $85, and $90 and at nine cents per litre when WTI is priced between US $80 and $85.

The price of WTI was priced at over US $120 early Monday compared to US $62.33 at this time last year.

The tax cut will take effect April 1 and be in effect until at least the next provincial budget next March but will also be evaluated every three months.

It will also slightly reduce the amount of GST collected at the pump as well, with the government estimating total savings at about 13.6 cents per litre.

The province says the cut also applies to marked gasoline and marked diesel. Those fuels are taxed at a lower rate of four cents per litre and can be bought only by eligible farmers, commercial and government entities.

He estimated the program would result in $1.3 billion in savings for Alberta motorists.

Gas prices crossed the $1.50 per litre threshold at some stations in Edmonton and Calgary last week before rising again over the weekend.

WILL RETAILERS REDUCE PRICES?

Finance Minister Travis Toews said the government will monitor prices at the pump to ensure that savings from the tax cut will be passed on to drivers.

“We will be paying attention to the pricing behaviour of retailers,” Toews said.

Toews conceded the province has no legal means to force gas retailers to reduce their prices following the tax cut but said the government would “put pressure” on providers to do so, adding he was confident motorists would see the savings.

“We’ll be providing enough time so that retailers can effectively be confident that the tax that’s built into their current inventory will be rebated on top of that.”

Toews said the reduction in tax revenue would not result in a change to the budget surplus announced a few weeks ago.

“We will be ahead fiscally, in spite of the fact that we’re able to provide this deep tax relief.”

COMING ELECTRICITY REBATE

Kenney also announced his intention to introduce a $150 retroactive rebate for most families and small businesses on their energy bills from the winter.

He also warned the rebate may be a while in coming as the province must make arrangements with more than 45 energy providers.

Kenney estimated the project would amount to $280 million being distributed to Albertans.

The province says one million homes, farms and businesses should expect to receive a $50 monthly rebate for three months.

The province introduced a natural gas rebate in its latest budget for consumers if rates hit $6.50 per gigajoule next winter. The plan was criticized for its high threshold which is well above current rates.

'LATEST PLAN FALLS WELL SHORT'

The Official Opposition believes the new measures are insufficient to support Albertans as rising costs continue.

The NDP put forward an emergency motion in the legislature to create an electricity rebate program with immediate effect with an eligibility rate lower than the current $6.50 per gigajoule amount set by the province.

"Albertans are struggling right now," said Kathleen Ganley, energy critic, in a statement.

"The cost of everything is going up, and many of these rising costs are a direct result of UCP policy," Ganley added. "The UCP's latest plan falls well short of what's needed, and Albertans will continue to struggle with basic costs."

According to Ganley, offering a $150 rebate to help Albertans cover the cost of rising electricity costs represented "little help."

Opposition members also wanted an immediate suspension of the 13-cent-per-litre provincial gas tax for three months, no matter the oil price, with provisions to reassess how long not to collect the tax.

UCP MLAs defeated the motion. Ganley called on the premier to stop creating "fake rebates" that would not help Albertans.

With files from CTV News Edmonton's Adam Lachacz