The provincial gas tax cut promised by Prime Minister Doug Ford ahead of the June election goes into effect on Friday and experts say it may offer some relief to drivers facing high pump prices, but the long-term benefits for consumers are unpredictable.
The government passed legislation this spring to reduce the gas tax by 5.7 cents per liter and the fuel tax, which covers diesel, by 5.3 cents per liter for six months.
The changes will take effect from July 1 to December 31, with the government setting the cost at $ 645 million.
Normal fuel prices are close to or above $ 2 per liter in cities across the province.
Roger McKnight, chief oil analyst at En-Pro International, says the forthcoming gas tax cut is a belated “Band-Aid solution”, but consumers are likely to see some benefit in its early days.
As of Thursday afternoon, McKnight had estimated that the price drop on Ontario pumps should be around 11 cents per liter on Friday, bringing prices to an average of 1,929 per liter.
As gas prices are influenced by factors outside the country, he said there is a limit to what Canadian politicians can do to control prices in the long run.
He noted that Ford could face a tough decision in December when the measure expires and prices are likely to rise again shortly before Christmas. There could also be fluctuations during the six-month period of tax cuts, he said, noting the potential impact from next weekend in the United States.
“My advice to consumers when they see the price on Friday is to enjoy it, but I do not know how long it will last,” McKnight said. “Politicians have no control over the price of crude or geopolitics that happens far beyond our borders.”
Ford has pledged to cut gas prices during its first district election campaign in 2018, promising to cut pump prices by 10 cents a liter by scrapping the cap-and-trade system and cutting the provincial gas tax.
The government ended the ceiling and trade after the election, but the federal coal tax then began, which nullified any savings. Ford had also promised to cut gas taxes last fall, but ultimately did not do so, saying later that it was not the time.
He has also called on the federal government to make further cuts.
Teresa Di Felice, assistant vice president at the Canadian Automobile Association in south-central Ontario, said it was difficult to predict where gas prices would go, but the cut would stop costs from rising so sharply.
“Hopefully this will create some breathing space,” he said.
Di Felice noted that it comes in combination with other measures, such as a discount for people traveling within the province, which seems to offer people some financial opportunity to travel and spend money in the countryside this summer, as well as many pandemic restrictions. have been lifted.
“I think they are considering a combination of efforts to keep the economy afloat after some really difficult years,” he said.
