Will there be lower gas prices after the B.C. carbon tax is axed? | Daily Hive

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Last Friday, after Prime Minister Mark Carney moved to abolish the federal consumer carbon tax, Premier David Eby announced that British Columbia would follow suit by eliminating its provincial consumer carbon tax.

There are still some major unknowns in the exact details of how this will be carried out, including when it will take effect, but Eby announced last week that new legislation was in the process of being prepared.

With growing economic headwinds, especially from the impacts of U.S. tariffs on Canadian goods, the intention is to provide consumers with some relief in their cost of living.

Additionally, the provincial government’s scheduled increase to the provincial consumer carbon tax on April 1, 2025, will be cancelled.

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If implemented as intended to provide financial relief, this move should lower the cost of fuelling vehicles.

Currently, the total taxes paid per litre of gas within Metro Vancouver is 64.5 cents before GST, including 26.11 cents to the provincial government — 17.61 cents through the provincial consumer carbon tax, 6.75 cents through the provincial gas tax to the B.C. Transportation Financing Authority (BCTFA), and 1.75 cents through the provincial gas tax to general provincial revenues.

Another 18.5 cents in gas taxes paid in Metro Vancouver goes to TransLink, and there is also a 10 cent flat-rate federal excise tax, which has been in place since 1995.

In Greater Victoria, gas taxes total 47.61 cents per litre before GST, including 17.61 cents for the provincial consumer carbon tax, 7.75 cents to provincial general revenues, 6.75 cents to BCTFA, 5.5 cents to BC Transit’s Victoria operations, and 10 cents to the federal excise tax.

Within B.C. outside of Metro Vancouver and Greater Victoria, the total taxes paid is 42.11 cents per litre before GST, including 17.61 cents to the provincial consumer carbon tax, 7.75 cents to provincial general revenues, 6.75 cents to BCTFA, and 10 cents to the federal excise tax.

In all areas of B.C., the federal excise tax is in addition to the five per cent GST, which is applied as a “tax-on-tax” — applied after all other per-litre taxes.

With the elimination of the provincial consumer carbon tax, the cost of gas across B.C. should come down by up to 17.61 cents per litre, plus the associated decrease in GST. Without the cancellation of the increase in the provincial consumer carbon tax on April 1, this per-litre tax rate would have increased by 3.4 cents from 17.61 cents to 20.91 cents.

For vehicles that use diesel and other light fuels, the provincial consumer carbon tax in all three B.C. areas of 20.74 cents per litre will be removed.

Individuals and families should see cost savings in reduced gas taxes, but they will also benefit businesses, specifically the movement of freight — such as the trucks that move goods from warehouses to shops and restaurants. This could help reduce retail price inflationary pressures.

Beyond transportation, removing the provincial consumer carbon tax will also reduce heating costs, benefiting homes that rely on natural gas for water heating, space heating, and cooking. Also expect reductions in the cost of propane, coal, and other heating fuels from this policy shift.

According to a bulletin by FortisBC last week in response to the provincial government’s announcement on the future of its consumer carbon tax, the average FortisBC residential customer uses about 7.5 gigajoules of natural gas per month, which adds about $29 to average monthly bills for such customers.

However, the big question remains whether there could be any increases to the industrial carbon tax to at least partially offset the significant government revenue losses of eliminating the consumer carbon tax and the intended consumer savings. The industrial carbon tax is applied to big businesses, such as manufacturing, production, and other large industrial emitters.

According to the provincial government’s recently released 2025 budget, it was estimated that provincial carbon tax revenue would reach $2.56 billion in the 2024/2025 fiscal year, $4.03 billion in 2025/2026, $4.27 billion in 2026/2027, and $4.51 billion in 2027/2028.

The provincial government also provides a carbon tax credit to low- and middle-income individuals and families to help offset costs, with this tax credit program costing $683 million in the 2023/2024 fiscal year and estimated to cost $995 million in the 2024/2025 fiscal year and $1.025 billion in the 2025/2026 fiscal year. Without the provincial consumer carbon tax, this credit budgetary expenditure would no longer be necessary.

The 2025 provincial budget had budgeted hikes to the carbon tax over the coming years. The consumer carbon tax applied to gas would have increased from 20.91 cents starting this April to 24.22 cents in the 2026/2027 fiscal year and 27.52 cents in 2027/2028.

Furthermore, by 2027/2028, there would be a 56 per cent hike to the consumer carbon tax applied on natural gas, light fuel, and industrial emitters.

So far, Eby and Carney have maintained that the industrial carbon tax will remain.

However, on Monday, federal Conservative party leader Pierre Poilievre announced a promise to eliminate not only the consumer carbon tax but also the industrial carbon tax, including the federal backstop that requires the provinces to impose an industrial carbon tax.

In Metro Vancouver, questions remain about whether TransLink will increase its gas tax within its service area to help address its looming fiscal shortfall starting in 2026.

TransLink’s gas tax is one of the revenue levers under the control of the public transit authority. During TransLink’s last fiscal crisis in 2009, it increased its gas tax by three cents, from 12 cents to 15 cents, to help cover its operating budget shortfall.

TransLink’s gas tax revenues peaked in 2022, and this source of revenue is now expected to drop with each passing year due to the growing adoption of battery-electric vehicles and further improvements to fuel economy. Gas tax revenue will decrease by $22.9 million to $366.5 million in 2025 — down from $389.5 million in 2024 and $390.5 million in 2023.

As of today’s writing, regular gas prices in Metro Vancouver hover between 169.9 cents per litre and 179 cents per litre, according to Gas Buddy.

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