Six-month cut to Ontario gas and fuel tax takes effect today

Ontario’s gas tax will be cut by 5.7 cents per litre for six months starting today.

Legislation that passed this spring will also see the fuel tax, which covers diesel, cut by 5.3 cents per litre over the same period.

The government has said the tax cut will cost $645 million while it’s in effect. Premier Doug Ford says he would consider extending the measure past December 31 if inflation is still high at the time.

Drivers noticed the impact Friday at gas stations in the Toronto area, where prices dropped around 11 cents overnight to $1.93 — only partly attributable to the tax cut.

“Every dollar counts,” said Matthew Johnston as he filled up a cargo van at a downtown Toronto gas station. “This will actually help a bit.”

Gas prices in Toronto are up nearly 40 per cent since the start of the year, reaching a record-high $2.15 per litre in early June before ending the month at around $2.00 per litre.

It’s expected to offer some relief to consumers but experts have said the impact of the tax cut may fluctuate due to external factors.

Roger McKnight, Chief Petroleum Analyst at En-Pro, previously told CityNews the price at the pumps was expected to drop 11 cents on Friday at most stations on average in the GTA to 193.9 cents/litre.

Further relief is expected at midnight, McKnight says gas prices are expected to drop even more on Saturday, predicting a seven-cent drop to 186.9 cents/litre at most stations.

The combination of a 5.7 cent per litre cut in the Ontario gas tax effective Friday July 1, and a fall in the U.S. cash futures prices means pump prices should fall by 11 cents per litre on Friday, July 1.

— Roger McKnight (@RogerMcKnight) June 30, 2022

The drop at the pumps, McKnight said, was due to the Ontario gas tax cut and a drop in wholesale prices, which can be attributed to an increase in U.S. inventory and a slowdown in the demand for gas, diesel and jet fuel south of the border.

Ford has said the cut to the gas tax and the elimination of license plate renewal fees would save a household, which owns a vehicle, around $465 this year.

Ford is also calling on the feds to temporarily remove the 11 cents per litre carbon tax to further help drivers’ wallets.

Starting this month, Ontarians will be getting more money from the federal government’s carbon-price rebate cheques to help with the price of gas.

The payments will come quarterly, and the first cheques for this year will be a double payment for two quarters in July, followed by quarterly payments in September and January 2023.

Gas prices are displayed at a Petro Canada gasoline station in Ajax, Ont., on March 7, 2022. THE CANADIAN PRESS/Doug Ives.

Johnston, who runs an upstart catering business and works at a winery, says the soaring price of gas paired with inflation has forced him to cut back on spending.

“I haven’t been able to go out or do anything anymore… It’s honestly just all gone to gas, rent – you know, just the cost of living,” he said.

Hermain Kazmi called the tax cut a move in the right direction as he pumped gas into his car. He said high gas prices recently pushed him to use more public transit, but he expected to return to his previous driving habits if prices came down.

Kazmi was “100 per cent” in support of the government extending the tax cut into 2023, even expressing the hope it could lead to more financial relief.

“I don’t think a 10 cent drop would make a huge impact. It’s a good change but I think it needs to come down lower depending on how much inflation is and how salaries have not matched how inflation has gone up,” he said.