Alberta suspends fuel tax for three months as rebate program falters

Albertans filling their tanks may soon be saving cash as the province’s gas tax holiday starts today.

Premier Danielle Smith’s government is pausing its tax of 13 cents per litre on gasoline and diesel until the end of the year to ease the pressure of high everyday costs.

The province estimates it will forego $350 million in revenue in the coming three months.

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Alberta’s fuel tax suspension will cost government coffers far more than the rebate program it replaces.

On the heels of a projected $2-billion budget surplus, Smith ditched a $100 fuel tax rebate program and reverted to cutting the fuel tax until the end of the year.

Nearly 3.4 million adult Albertans were eligible for the rebate, but Finance Minister Jason Nixon said Wednesday only about 1.5 million people have applied.

"The low number of rebate applications made it clear the government couldn’t dole out the cash efficiently," Nixon said.

Smith had said the province went with payments out of concern that tax cuts don’t always get passed on to consumers.

Smith later acknowledged Albertans weren’t happy with the rebate program.

The online application portal was criticized by some as invasive and onerous, although the government tweaked the process to try to make it smoother.

Nixon previously said he’s not entirely confident the tax cut will be passed on to consumers.

The federal government has also extended its fuel excise tax relief until the end of January, which is expected to save drivers up to 10 cents a litre on gas, or four cents per litre on diesel.

Albertans are already paying less, on average, than drivers across the country.

On Wednesday, the Canadian Automobile Association pegged the average price of gas in Canada at $1.77 per litre.

The gas price tracking website GasBuddy, as of Wednesday afternoon, estimated Alberta’s average to be $1.67 per litre.

Fuel prices have soared since the U.S. war on Iran began in late February, choking the Strait of Hormuz, a vital shipping lane at the mouth of the Persian Gulf.

The impact has turned Alberta’s finances around.

Its budget is heavily dependent on oil exports, and before the conflict in the Middle East, was predicting a $9.4-billion deficit this fiscal year.

Eligible adults also have until the end of October to apply online for the $100 fuel tax rebates that started rolling out in July.

With files from The Globe and Mail