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Expect higher gasoline prices after carbon tax hike

$10 per tonne carbon tax increase will add more than two cents to litre of gas
Carbon taxes jumped by $10 per tonne on Thursday, rising to $40 per tonne. That will raise the cost of gasoline by more than two cents per litre. (Advocate file photo)

Canada’s $10 per tonne carbon tax increase will inevitably be felt at the pumps, says a gasoline price analyst.

The increase that kicked in on Thursday will add about 2.3 cents to the cost of each litre of gasoline. The total cost of the $40 per tonne carbon tax now in place boosts the cost of gas by about 9.3 cents per litre, said Dan McTeague, president of Canadians for Affordable Energy.

Those taxes come on top of the 23 cents in taxes the provincial and federal government take for every litre of gasoline sold.

While prices at gas stations in the Red Deer area appeared to be holding steady at just under $1.19 per litre at most stations on Thursday afternoon, it is only a matter of time before retailers pass on the increased costs, said McTeague.

“Whether gas stations have opted to increase it or not they’re still on the hook,” said McTeague.

The cost of buying a litre of gasoline for gas stations is about $1.11, meaning the profit margin is only about seven cents per litre.

“There will be a change throughout the week. There will be some gas prices coming. I would expect $1.20, $1.21 to $1.22.

“Sooner or later these gas stations have to throw in the towel.”

By evening, some stations had already gone up to $121.9.

For a family that uses $60 worth of gas a week, the increase will add more than $300 in gasoline costs for the year. By 2030, when the carbon tax is supposed to hit $170 per tonne, which would add almost 40 cents per litre of gasoline.

McTeague is sharply critical of the carbon tax, saying its economic impact on Canadians far outweighs its environmental benefits.

Besides gasoline, Canadians will also see other fuel prices, such as natural gas and propane increase, further boosting family bills.

The Canadian Taxpayers Federation also condemned the Liberal government and Prime Minister Justin Trudeau for its carbon tax policy.

Carbon taxes alone cost Canadian families about $7 more every time they fill up the typical 75-litre gas tank on a minivan, said Franco Terrazzano, the federation’s Alberta director.

At the same time, the alcohol escalator tax automatically increases excise taxes on beer, wine and spirits every year by the rate of inflation on April 1. Taxes already account for about half of the price of beer, 65 per cent of the price of wine and more than three quarters of the price of spirits, Terrazzano said.

Meanwhile, MPs are expected to receive a 1.7 per cent raise this year.

“With millions of Canadians struggling through the COVID-19 downturn, the least our MPs could do is cancel this cruel April Fools’ Day joke and end the tax and politician pay hikes,” said Terrazzano.