A motorcyclist fills his car at a local in Ottawa, Ont. gas station in Ottawa, Ont. on May 6. Spencer Colby / The Globe and Mail
Ontario’s small business and tourism sectors are optimistic that the six-month temporary cut in gasoline taxes will spur an increase in travel this summer.
On Friday, the province’s gasoline tax was reduced by 5.7 cents a liter and the fuel tax for diesel was reduced by 5.3 cents a liter in an effort to provide financial relief amid rising prices for pumps. The temporary reduction will be in effect until the end of the year and is expected to cost the province $ 645 million.
The Conservative progressive government of Prime Minister Doug Ford introduced the measure in April to combat rising oil prices caused by Russia’s invasion of Ukraine. Since then, inflation has continued to rise and food and gas prices remain high.
Gasoline prices may rise as they fluctuate over the summer, but Mr. Ford said the tax cut will at least provide some relief for people struggling with the high cost of living. The government estimates that this measure will save a family with two cars about $ 815 over the next six months.
The president and CEO of the Ontario Tourism Industry Association, Chris Bloore, said it is a positive step for a sector that has been hit by a “double blow” from the COVID-19 pandemic and rising prices. With tourism generated from the land border between Canada and the United States still half of pre-pandemic levels, Mr. Bloore said he hopes the tax cut will allow families to travel and extend their stay.
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In a May poll by Leger, 66% of drivers said high fuel prices would lead them to cancel or limit road trips this summer.
“I’m sure this would mean that those people who are considering changing their trip from two weeks to one week will go back two weeks because the only thing people have desperately needed over the last two and a half years is the ability to travel. and go out and enjoy it again, ”Mr. Bloore.
Tax cuts are also good news for small businesses that have struggled during the pandemic. Ryan Mallough, vice president of legislative affairs for Ontario at the Canadian Federation of Independent Businesses, said fuel costs remain a major concern and were the top priority for member companies ahead of the June provincial election .
Mr. Mallough said 54 per cent of member firms have not returned to pre-pandemic income levels and another 62 per cent are still facing debt.
“The hope is that it will take some of the pressure out of consumers’ pockets and allow them to perhaps spend a little more freely on businesses, ”he said.
But with the price of fuel affecting consumers as well as the shipment of goods, Mr. Mallough said additional relief from the federal government would be beneficial.
In statements about the tax cut Thursday at a Brampton 7-Eleven gas station, the prime minister echoed those sentiments and urged the federal government to offer its own financial relief by temporarily reducing its tax rate.
“We need to do more and this is the time for all governments to come together to put pressure on Canadians when they need it most,” Ford said. “This is a real and tangible solution that we can offer Canadians at a time when costs are higher than they have ever been and supply chain problems and global conflicts only make things worse.”
Last week, Canada’s Natural Resources Minister Jonathan Wilkinson said the government had no immediate plans to reduce prices at the pump, but was focused on stabilizing prices by increasing supply.
During his 2018 election campaign, Mr. Ford pledged to permanently reduce gas prices by 10 cents. The province ruled out the cap-and-trade system, which amounted to 4.3 cents a liter, but this was denied by the federal carbon tax that came into effect later.
Over the first weekend with the tax cut, Canadians for Affordable Energy President Dan McTeague said gas prices are expected to drop 11 percent on Friday and at least an additional six cents on Saturday. As of Thursday afternoon, the average gas price in Ontario was $ 2 a liter according to data from the Canadian Automobile Association.
“I don’t think for a moment that oil and gas prices have peaked,” Mr. McTeague.
Also on Thursday, Mr. Ford confirmed it would revoke the legislature on Aug. 8 for a five-week session to reintroduce and approve the 2022-23 budget. At the end of the last term a budget was presented and Mr. Ford said the only change planned is a five per cent increase in Ontario’s support payments for people with disabilities.
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