Overview
In Canada, motor vehicles are primarily powered by gasoline or diesel fuel. There are other energy sources including ethanol, biodiesel, propane, compressed natural gas, electric batteries charged from an external source, and hydrogen. Comparing most countries or regions, Canada also has excise taxes and other types of taxes, such as gasoline, diesel, and other liquid and gas motor fuels (collectively called fuel taxes), and taxes electricity at various administrative levels. In most cases, if people buy clear fuel for an internal combustion engine, then they need to pay fuel tax except companies hold Fuel Acquisition Permit, or members of the diplomatic corps.
Coverage
Fuel tax is collected from consumers by retailers who pay the tax to designated wholesalers. These designated wholesalers then report and remit the tax to the ministry. In Canada, as for most provinces and territories, there are taxes being imposed on the motor fuels. Especially, to some certain provinces, they still have some additional taxes on the motor fuel thereby controlling and managing environmental pollution, such as Montreal, Greater Vancouver, and Victoria.
Exemption
According to the up-to-minute information, on April 1, 2012, jet fuel used by commercial air services for some certain flights are exempt from Motor Fuel Taxation. Although this exemption plays an instrumental role under the Motor Fuel Tax Act, this exemption does not be applied into the most flights due to the restrictions of Canadian government. For example, some commercial flights between two destinations in British Columbia or flights that connect British Columbia with another destination in Canada. In other word, this exemption really helps the international flights rather than the domestic flights. The motor fuel tax concessions are provided to encourage the development of cleaner and more environmentally friendly motor fuels. For the purposes of the motor fuel tax concessions, motor vehicles are vehicles designed to be self‐propelled on land, including cars, trucks, vans, sport utility vehicles and other vehicles of this type.
With these changes, some commercial air services are eligible to receive an exemption at the point of sale. Other commercial air services must pay the motor fuel tax on jet fuel and may then apply for a refund of the motor fuel tax paid on jet fuel used for international flights.
The following are exempt from tax under this Act:
- Fuel that is brought into British Columbia in the supply tank or in a supplemental supply tank of an aircraft or ship, if the fuel in the supply tank or supplemental supply tank is to be used in the operation of the aircraft or ship.
- Up to and including 182 liters of fuel that is brought into British Columbia in the supply tank or a supplemental supply tank of a motor vehicle, other than an IFTA commercial vehicle or a locomotive, if the fuel in the supply tank or supplemental supply tank is to be used in the operation of the motor vehicle.
Tax Rate Adjustment
Alternative fuel vehicles that are passenger vehicles are eligible for a reduction in the price of the vehicle for the determination of the applicable tax rate. Passenger vehicles are motor vehicles designed primarily as a means of transportation for individuals including cars, station wagons, motorcycles, trucks and vans. Buses and larger trucks are not included according to the relative laws of Motor Fuel Taxation.
As the cost of an alternative fuel passenger vehicle is commonly higher than the cost of gasoline or diesel, and these vehicles may be subject to a higher rate of tax. This permit allows the price of a vehicle to be reduced by $7,000 in order that reduced prices are applied to decide the adjustment of tax rate.
Fuel Tax in Canada
Fuel taxes in Canada can vary greatly between locales. On average, about one-third of the total price of gas at the pump is tax. Excise taxes on gasoline and diesel are collected both federal and provincial governments, as well as by some select municipalities (Montreal, Vancouver, and Victoria); with combined excise taxes varying from 16.2 ¢/L (73.6 ¢/imperial gal; 61.2 ¢/US gal) in the Yukon to 30.5 ¢/L ($1.386/imperial gal; $1.153/US gal) in Vancouver. As well, the federal government and some provincial governments (Newfoundland and Labrador, Nova Scotia, and Quebec) collect sales tax (GST and PST) on top of the retail price and the excise taxes.
TransLink’s expansion with Fuel Tax Revenue:
TransLink’s much-hated gas tax isn’t pulling in as much cash as it used to, as motorists either gas up outside the BC region or simply drive less.
The transportation authority took in $312 million in 2011 from the fuel tax, according to its annual report. That was down nearly $12 million from 2010 as motorists bought 5.9 per cent less gasoline or diesel within Metro Vancouver.”High prices of fuel and a strong Canadian dollar would have contributed to the decline in fuel sales volume, which likely migrated to the Fraser Valley Regional District and Whatcom County,” the report said.
It said other factors likely include more fuel-effficient vehicles, increased use of transit or cycling, and less commuting overall.”If the trend continues, the impact of this reduction could be in the magnitude of a $450- to $550-million revenue loss in a 10-year period.”
The gas tax that goes to TransLink increased this month from 15 to 17 cents a litre and the hike is expected to raise an extra $40 million a year.
But concern that the gas tax may be an increasingly unstable source going forward is one reason area mayors have talked about using other revenue sources, like a vehicle levy or road pricing, to fund TransLink’s longer term expansion.
Reference:
http://www.fin.gov.on.ca/en/tax/ft/index.html
http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_96317_01
http://www.sbr.gov.bc.ca/business/consumer_taxes/MotorFuelTax_CarbonTax/mft_ct.htm
http://www.independent.co.uk/news/uk/government-may-impose-taxes-to-reduce-pollution-1554863.html