A driver charges his car in a local Ottawa, Ontario. gas station in Ottawa, Ontario. on May 6. Spencer Colby/The Globe and Mail
Ontario’s small business and tourism sectors are optimistic that the province’s temporary six-month reduction in gas taxes will spur more travel this summer.
On Friday, the province’s gas tax was cut by 5.7 cents per liter and the fuel tax on diesel fell by 5.3 cents per liter in a bid to provide financial relief amid rising pump prices. The temporary reduction will be in effect until the end of the year and is expected to cost the province $645 million.
Prime Minister Doug Ford’s Progressive Conservative government introduced the measure back 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.
Petrol prices may rise as they fluctuate over the summer, but Mr Ford said the tax cuts would provide at least some relief for people struggling with the high cost of living. The government estimates that this measure will save a two-car family about $815 over the next six months.
Tourism Industry Association of Ontario president and CEO Chris Bloor said it’s a positive step for a sector that has been hit with the “double whammy” of the COVID-19 pandemic and increased prices. With tourism generated by the Canada-US land border still half of pre-pandemic levels, Mr. Bloor said he hopes the tax cuts will allow families to travel and extend their stays.
Gas tax credits are currently unavailable as the Liberals grapple with affordability issues
In a May survey conducted by Leger, 66 percent of drivers said high fuel prices would cause them to cancel or limit trips this summer.
“I’m confident that this will mean that those people who are considering changing their travel from two weeks to one week will go back to spending two weeks because the one thing people have desperately needed for the last two years and half, is the ability to travel, go out and have fun again,” Mr Bloor said.
The tax cuts are also welcome news for small businesses struggling during the pandemic. Ryan Mallow, Ontario vice-president of legislative affairs for the Canadian Federation of Independent Business, said fuel costs continue to be a top concern and are the top priority for business members ahead of the provincial election in June.
Mr Mallow said 54 per cent of member firms had not returned to pre-pandemic revenue levels and another 62 per cent were still dealing with debt.
“The hope is that it really eases a little bit of pressure on consumers’ pocketbooks and allows them to maybe spend a little more freely in business,” he said.
But with the price of fuel affecting consumers as well as the supply of goods, Mr Mallow said further relief from the Federal Government would be beneficial.
Speaking about the tax cuts Thursday at a Brampton 7-Eleven gas station, the premier echoed those sentiments and called on the federal government to provide its own financial relief by temporarily lowering its share of taxes.
“We need to do more and now is the time for all governments to come together to take the pressure off Canadians when they need it most,” said Mr. Ford. “This is a real, tangible solution we can bring to Canadians at a time when costs are higher than ever and supply chain issues and global conflicts are only making things worse.”
Canada’s Natural Resources Minister Jonathan Wilkinson said last week that the government has no immediate plans to lower pump prices, but is instead focusing on stabilizing prices by increasing supply.
During his 2018 election campaign, Mr. Ford promised to permanently cut gas prices by 10 cents. The province did away with a cap-and-trade system amounting to 4.3 cents per litre, but that was reversed by the federal carbon tax that subsequently went into effect.
For the first weekend of the tax cut, Canadians for Affordable Energy president Dan McTeague said gas prices are expected to drop 11 per cent on Friday and at least another six cents by Saturday. As of Thursday afternoon, the average price of gasoline 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 said.
Also on Thursday, Mr. Ford confirmed he would recall the legislature on Aug. 8 for a five-week session to reintroduce and pass the 2022-23 budget. The budget was tabled at the end of the last term, and Mr. Ford said that the only expected change is a five per cent increase in Ontario Disability Support rates.
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