Cutting gas tax expected to save average family $130 over three months: economist

The province’s plan to stop collecting the provincial gas tax is expected to save families upwards of $70 over three months, according to an economist.

Alberta is planning to stop collecting the taxes starting on April 1, which would drop the price at the pump by 13 cents. The move came in response to “skyrocketing costs at the pump,” said Premier Jason Kenney on Monday.

After crunching the numbers, an economist at the University of Calgary expects families to save between $70 and $220 at the pumps between April and June, depending on household income.

“The average family uses about 200 litres of gasoline per month so on average, we estimate that the typical Alberta family will stay at approximately $130… and might save more depending on how long this provincial tax holiday lasts,” said Trevor Tombe.

“That does differ depending on how much fuel you buy, so lower income families do tend to purchase less fuel.”

Tombe said families with incomes less than $30,000 are expected to save around $70 while households with incomes over $150,000 can expect to save around $220 on gas between April and June.

The province could offer instant relief to lower income families through cash rebates, added Tombe. In 2006, the Ralph Klein government cut $400 cheques to every Albertan when the province saw a $1.4 billion surplus.

On Thursday, Kenney was asked about this option and said, “why don’t you go talk to regular people at the pumps?”

CTV News Edmonton spoke to 10 people about what they would prefer, with five preferring a rebate, one supporting the gas tax relief, one having no preference and three not wanting to offer opinions on camera.

“It should be up to Albertans what they want to do with that money and having it in a physical form might be better than 13 cents back,” said one Edmontonian.

“At the pump is ok, savings anywhere is ok but I also expect things will rise no matter what,” said another Edmontonian.

The timing of the savings rollout has also been questioned, Tombe said there was “no mechanical reason why the government couldn’t lower the provincial tax immediately,” despite the premier’s insistence to the contrary.

“We have seen changes in provincial gasoline taxes take place immediately after the announcement or the next day,” Tombe added.

He pointed to when Jim Prentice announced an increase to the provincial gas tax, which resulted in the current 13 cent rate, which was implemented “right away.”

“The choice of April 1 is a function of two things… that’s the beginning of the fiscal year, so the implications of this tax change won’t affect the 2021-2022 fiscal year numbers of the government,” said Tombe.

“Two, I think they did deliberately want to time it with the carbon tax to facilitate the kind of political back and forth that the province is seeking with the feds.”

The federal carbon tax is expected to raise the price at the pumps by 2.2 cents, according to Tombe.

With files from CTV News Edmonton’s Chelan Skulski