Fuel Consumption Levies in Canada
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 direct or indirect government levies. Depending on where you live, you may pay a federal, provincial and a municipal tax on these products, as well as a federal fuel charge.
How are fuels taxed?
There are different types of taxes on transportation and heating fuel:
Fixed taxes
The federal government charges an excise tax at a flat rate of 10 cents per litre on gasoline (in effect at that rate since 1995) and 4 cents per litre on diesel (in effect at that rate since 1987). Furnace oil is exempt from this tax and there is no federal excise tax on natural gas or propane.
Provincial governments also collect gasoline and diesel taxes and these vary considerably by province. Lastly, three municipalities in Canada (Vancouver, Victoria and Montreal) also apply taxes on gasoline.
Sales taxes
This tax is based on a percentage of the retail price, a method known as ad valorem. The federal GST/HST is charged on crude oil, refining and marketing costs and margins, the federal excise tax, applicable federal and provincial carbon levies, and provincial road taxes. Provincial sales taxes do not apply to fuels such as gasoline or diesel, except where they have the harmonized sales tax (HST) and in Quebec (QST).
| Federal and Provincial Consumption Taxes on Petroleum Products | ||||
|---|---|---|---|---|
| Gasoline | Diesel | Propane (motor vehicle) |
Furnace Oil/ Natural Gas (for heating) | |
| Federal Taxes | ||||
| Excise Tax (Cents/Litre) | 10.0 | 4.0 | - | - |
| Goods and Services Tax | 5% | 5% | 5% | 5% |
| Provincial Sales Tax (PST or HST) (1) | ||||
| Ontario | 13% | 13% | 13% | 13% |
| Quebec Sales Tax (QST) | 9.975% | 9.975% | 9.975% | 9.975% |
| Nova Scotia (2), Newfoundland and Labrador, New Brunswick and Prince Edward Island | 15% | 15% | 15% | 5% |
| Provincial Fuel Taxes (Cents/Litre) | ||||
| Newfoundland and Labrador (3) | 7.5 | 9.5 | 7.0 | |
| Prince Edward Island | 8.47 | 14.15 | ||
| Nova Scotia | 15.5 | 15.4 | 7.0 | |
| New Brunswick | 10.87 | 15.45 | 6.7 | |
| Quebec (4) | 19.2 | 20.2 | ||
| Ontario (5) | 9.0 | 9.0 | 4.3 | |
| Manitoba | 14.0 | 14.0 | 3.0 | |
| Saskatchewan | 15.0 | 15.0 | 9.0 | |
| Alberta (6) | 0 | 0 | 0 | |
| British Columbia – Vancouver Area (7) | 27.00 | 27.50 | 2.7 | |
| British Columbia – Victoria Area (7) | 20.00 | 20.50 | 2.7 | |
| British Columbia – Rest of province (7) | 14.50 | 15.00 | 2.7 | |
| Yukon | 6.2 | 7.2 | ||
| Northwest Territories (8) | 10.7/6.4 | 9.1 | ||
| Nunavut | 6.4 | 9.1/3.1 | ||
| Federal and Provincial Carbon Levies | ||||
Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Yukon, Nunavut (9) |
11.05 |
13.41 |
7.74 |
$2.628908/GJ (9.79 - cents/m3) |
British Columbia |
11.05 |
13.01 |
7.74 |
$2.5588/GJ (9.79- cents/m3) |
Newfoundland and Labrador |
11.05 |
13.41 |
7.74 |
$2.628908/GJ (9.79 - cents/m3) |
Nova Scotia (10) |
1.1 |
1.3 |
0.7 |
$0.2352/GJ (1.2 - cents/m3) |
Prince Edward Island |
11.05 |
13.41 |
0 |
0 |
Quebec (11) |
5.66 |
7.21 |
3.70 |
$1.1840/GJ (4.53 - cents/m3) |
Northwest Territories (12) |
11.7 |
13.7 |
7.7 |
$2.5778/GJ (9.6 - cents/m3) |
Notes:
Rates in the above table were last updated in April 2021
- Where the HST is in place, the federal portion of the tax is 5%.
- Nova Scotia has a point of sale tax rebate of the provincial portion of the HST (10%) on furnace oil.
- The rates will increase on January 1, 2023.
- In Quebec, gasoline, diesel and propane taxes are increased or reduced by varying amounts depending on location. An increased tax rate applies to gasoline delivered in the area of jurisdiction of the Autorité régionale de transport métropolitain (ARTM) and in the Région administrative de la Gaspésie-Îles-de-la-Madeleine (RAGIM). A decreased tax rate applies in certain remote areas and within 20 kilometres of the provincial and U.S. borders. The Quebec provincial sales tax (QST) applies to all petroleum products at a rate of 9.975%. The QST is calculated on the retail price, which includes the Quebec per litre tax, and the federal excise tax. More information is available on Revenu Quebec’s website.
- The rates will increase on January 1, 2023.
- More information is available on Alberta fuel tax rate overview at https://www.alberta.ca/about-fuel-tax.aspx#:~:text=Fuel%20tax%20rate&text=gasoline%20%E2%80%93%2013%20cents%20per%20litre,and%20marked%20diesel%20%E2%80%93%204%20cents
- British Columbia has varying taxes based on location. Taxes include dedicated motor fuel tax, provincial motor fuel tax, and a carbon tax. More information is available on the Government of British Columbia’s website.
- In the Northwest Territories, gasoline is taxed at 6.4 cents per litre in communities not served by a highway system.
- The federal fuel charge applies in these jurisdictions.
- Nova Scotia has a cap and trade system in place. The figures in the table are modeled estimates by the Government of Nova Scotia.
- Quebec has a cap-and-trade system in place. The figures in the table are estimated costs based solely on the sale price of emission units from the previous year. Many factors can influence the carbon cost of Quebec fuels, including changes in the market price of units and the timing of the purchase of emission units.
- The Northwest Territories Carbon Tax rate rises in July of each year. As such, the rates for the both first and second halves of 2021 are shown above.
Federal Fuel Charge
In addition to the taxes described above, a federal fuel charge applies in some provinces and territories.
As of January 1st, 2020, the federal fuel charge applies in Alberta. The federal fuel charge has applied in Saskatchewan, Ontario, Manitoba, Yukon, and Nunavut since 2019.
The fuel charge rates reflect a carbon pollution price of $20 per tonne of carbon dioxide equivalent (CO2e) in 2019, rising by $10 per tonne annually to $50 per tonne in 2022. For more information on fuel charge rates, please visit the Canada Revenue Agency webpage at https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/fcrates/fuel-charge-rates.html
Notes:
Taxes and the fuel charge are applied in the following order:
- consumption and excise taxes (municipal, provincial and federal),
- federal fuel charge and provincial carbon taxes, and
- the GST/HST are calculated and added onto the sum from steps 1 and 2.
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