Holly McKenzie-Sutter, The Canadian Press Published Wednesday, June 29, 2022 5:39 PM EDT Last Updated on Wednesday, June 29, 2022 5:46 PM EDT
The reduction in the provincial gas tax promised by Prime Minister Doug Ford before the June election will take effect on Friday, and experts say it may offer some relief to drivers facing very high bomb prices, but the Long-term benefits for consumers are unpredictable.
The government passed a law this spring to reduce the gasoline tax by 5.7 cents per liter and the fuel tax, which covers diesel, by 5.3 cents per liter for six months.
The changes will be in effect from July 1 to December 31 with the government setting the cost at $ 645 million.
Regular fuel prices are close to or above $ 2 per liter in cities in the province.
Roger McKnight, chief oil analyst at En-Pro International, says the upcoming gasoline tax cut is a “band-aid solution,” but consumers will likely see some benefit in its early days.
As of Thursday afternoon, McKnight calculated that price drops at Ontario pumps should be about 11 cents per liter on Friday, bringing prices to an average of 1,929 per liter.
Since gas prices are affected by factors outside the country, he said there is a limit to what Canadian politicians can do to control prices in the long run.
He noted that Ford could face a difficult decision in December when the measure expires and prices are likely to rise again just before Christmas. There could also be fluctuations during the six-month period of the tax cut, he said, pointing to the potential impact of the next long weekend in the United States.
“My advice to consumers when they see the price on Friday is to enjoy it, but I don’t know how long it will last,” McKnight said. “Politicians have no control over the price of crude oil or geopolitics that is happening outside our borders.”
Ford pledged to cut gasoline prices during its first provincial election campaign in 2018, promising to reduce pump prices by 10 cents per liter by eliminating the cap and exchange system and reducing the provincial gas tax.
The government ended the cap and trade after the election, but then began the federal carbon tax, which denied any savings. Ford had also promised to cut gas taxes last fall, but ultimately didn’t, and then said it wasn’t the time.
Since then, he has also called on the federal government to introduce more cuts.
Teresa Di Felice, deputy vice president of the Ontario branch in the south center of the Canadian Automobile Association, said it is difficult to predict where gasoline prices will go, but the cut should prevent costs from rising as much. significantly.
“Hopefully, that will only create a little space to breathe,” he said.
Di Felice noted that it is combined with other measures, such as a discount for people making trips to the province, which seem to offer people some financial margin to travel and spend money around the province this summer, as many pandemic restrictions have been lifted.
“I think they’re looking for a combination of efforts to keep the economy going after a couple of really tough years,” he said.