Taxes on Fuels
Summary
A portion of the final price you pay at the pump for gasoline and other fuels goes to various levels of government in the form of taxes. Depending on where you live, you pay a federal, provincial and, in some cases, a municipal tax on these products.
Federal taxes
The federal tax you pay at the pump has two components:
- Excise Tax is charged as a flat rate of 10 cents per litre for gasoline (in effect since 1995) and 4 cents per litre for diesel fuel (in effect since 1987). Furnace oil, natural gas and propane are exempt from this tax (only the GST or HST applies).
- Goods and Services Tax (GST) is calculated at 5% on all petroleum products, including gasoline, diesel fuel, furnace oil and propane. This tax is based on a percentage of the retail price, a method known as ad valorem.
In Newfoundland and Labrador, Nova Scotia, New Brunswick and Ontario, the GST and the provincial retail sales tax are combined to form the 13% Harmonized Sales Tax (HST), applicable to all retail petroleum products.
Provincial and municipal taxes
Provincial governments and some municipalities charge tax on gasoline and other petroleum products. Some provinces also impose an additional sales tax.
A tax is also collected on gasoline in three municipalities: Montreal (3.0 cents per litre), Vancouver (9.0) and Victoria (3.5). In Vancouver and Victoria, the tax also applies to the purchase of diesel fuel.
Taxes on Petroleum Products - December 31, 2011
Tax exemptions on alternative fuels
Alternative fuels are exempt from the federal excise tax. In the case of blended fuels where products such as ethanol and biodiesel are mixed with gasoline or diesel, the non-petroleum portions are tax exempt. Some alternative fuels are also exempt from provincial taxes.