What Happened to the GST Cut on Gasoline

Canadian drivers can be forgiven for scratching their heads at the pumps and wondering what happened to the GST cut on gasoline.

Since the federal tax on goods and services was cut to 6 % from 7 % on Canada Day, the average retail gas price has risen almost 4 cents a litre to $109.6.

Even with the lower GST (generally worth about a penny a litre less), the government is still collecting as much tax on each litre at $109.6 as it did back in March when the average price was 98.6 cents (a total of 33.3 cents in tax from all governments), according to a departmental chart.

This is entirely predictable. Any cut has been lost in the rise in price of gasoline. That 1 % in GST revenue has effectively gone from federal coffers and public programs into private pockets

The companies are just going to suck in that 1 cents GST that was announced.

Masse pointed out that the Conservatives, prior to the last election, had argued in favour of not charging the GST on gas beyond the 85 cents mark.

That policy was rejected in favour of the party's promise for broader tax relief with an across-the-board cut to the GST.

A further cut to 5 % is also promised.

But Calgary-based petroleum marketing specialist Michael Ervin said the rise in price shouldn't be seen as proof that gas stations are simply swallowing up the penny-a-litre GST cut rather than passing it on to consumers.

To look at the price of gas itself and draw conclusions is impossible.

Jim Fraser, who runs his own gas station and towing service in Arnprior, points out that drivers are also paying an extra 1.7 cents or so per litre worth of GST simply because it is also charged on provincial and other gas levies.