Each time new research is published, the prolific Research Chair in Taxation and Public Finance (CFFP) at Université de Sherbrooke “wants to thank the Ministère des Finances du Québec for their renewed support and to express their gratitude for the funding they provide “We will continue their research activities,” she writes at the beginning of each study.
One thing is for sure: François Legault, and in particular his finance minister Eric Girard, will appreciate the study “Quebec fuel taxation: observation and comparison” just published by the Sherbrooke University CFFP.
The study’s authors, Camille Lajoie, Michaël Robert-Angers and Luc Godbout, conclude that an increase in the fuel tax rate would provide the province of Quebec with an additional source of funding that would allow it to cover the shortfall in the amount of money that the country Transport Network Fund (FORT), which is intended to finance road works.
Note that the “fuel tax” currently levied by the Quebec government is a flat tax of 19.2 cents per liter.
This study is all the more timely given that on page H.23 of Minister Girard’s latest budget, we give a far from rosy assessment of FORT’s financial situation if it “will be stuck in an accumulated deficit situation from 2026 onwards”. 2027
According to the Treasury Department, FORT’s cumulative deficit will reach $2.7 billion over the period 2027-2028. Therefore: “Solutions have to be found here, with everyone involved,” we write in the budget.
Currently, FORT is financially supported by revenue from fuel taxes, driver’s license fees, and registration fees.
Why increase this tax?
Because the state fuel tax of 19.2 cents per liter has not changed for 10 years.
From the point of view of the three CFFP researchers, this suggests that the value of the revenue from this tax has therefore fallen, both relative to the price of gasoline and relative to GDP. Bracket: Ditto for the federal excise tax (10 cents per liter), which in his case hasn’t changed in 28 years!
In constant 2023 US dollars, the 2013 fuel tax of 19.2 cents/liter was worth about 24 cents and the excise tax of 10 cents/liter was worth about 12.5 cents.
Hence the “loss of purchasing power” of these two specific taxes, which have never kept pace with inflation over the past decade.
Because of this, the three researchers note that the Quebec government’s fuel tax offers a potential additional revenue stream.
Gasoline in good condition
By converting all components of the gasoline price into constant 2023 US dollars (ie federal excise tax, provincial fuel tax, carbon pricing). [SPEDE]GST, QST, price of petrol without taxes), the study concludes that the price of a liter of petrol in April 2023 was essentially the same as in April 2013.
As proof: 166.1 cents per liter in April 2023 compared to 167 cents per liter in April 2013!
Note that in 2022 it had reached 188.2 cents per liter before falling back to 166.1 cents.
The message behind this observation: Motorists have nothing to complain about the high price of gasoline as it has remained stable (in constant US dollars) over the past 10 years.
And since the two specific taxes (fuel tax and excise duty) have not changed for 10 years, this has obviously had no effect aimed at “discouraging” fuel consumption.
The Ministry of Finance has also calculated that a 10% increase in the price of petrol leads to a reduction in consumption of only 1.2%. This explains why “fuel is a commodity for which the demand is very inelastic in the short and long run”.
But green people can still hope: Norway has shown that fuel prices can increase and the use of petrol cars can be reduced if alternatives such as effective tax measures to reduce the cost of hybrid and electric vehicles are used. What we started here.
The greediest province
Last April, the price of a liter of gasoline at the pump was not highest in Quebec: Newfoundland Labrador (177 cents), British Columbia (174 cents), New Brunswick (170 cents) and Prince Edward Island (168). cent) outperformed Quebec (166 cents) in this regard.
But which province had the highest taxes last April?
Uh yes! we are the winners. The tax on a liter of gasoline at 166 cents was 59.6 cents or 35.9% of the total price. These included: provincial fuel tax (19.2 cents), federal excise (10 cents), SPEDE (8.8 cents included in price at loading dock), QST (14.4 cents), and GST (7.2 cents) .
In Alberta’s oil heaven, gasoline taxes have been capped at 31.1 cents, at a price of 142 cents per liter.
Diploma
To make us aware that the level of our specific gasoline taxes of 29.2 cents per liter (including 19.2 cents for Quebec and 10 cents for the federal government) is relatively low, the study’s authors remind us of the level they elsewhere in the region costs worldwide specific gasoline tax.
Out of 30 countries, Quebec has the second lowest specific tax, with the United States taking first place at 17 cents per liter. The specific tax is 51 cents per liter in Japan, 64 cents in Norway, 81 cents in Belgium, 83 cents in the United Kingdom, 88 cents in Germany, 92 cents in France, 98 cents in Italy and 103 cents in Switzerland.
With this study, “Quebec Fuel Taxes,” the CFFP at Sherbrooke University provides Treasury Secretary Eric Girard with the arguments he needs to increase his fuel tax.
To monitor…
