The Impacts Of The Gas Tax Cut

by | Jul 7, 2022

You might have heard the news about the gas tax cut in Ontario. On June 30th, the gas tax was reduced by 5.7 cents per liter, and the fuel tax for diesel dropped by 5.3 cents a liter. This, in turn, is beneficial for providing financial relief amid increasing pump prices. The reduction in gas taxes will also be helpful, particularly for small businesses in Mississauga, which have previously struggled during a pandemic due to high gas costs. Furthermore, this six-month reduction in gas tax will have a significant positive impact on travel this summer.

When it comes to the recent gas tax reduction, many people in Mississauga are looking for reliable information regarding the impacts of this new change. Therefore, in this article, Yogi and Associates will provide you with accurate information concerning the recent gas tax changes you are looking for. Let’s begin!

How Much has Gas Tax Cut been implemented?

A cut to Ontario’s gas tax that Premier Doug Ford recently promised has started working from July 1st. The Government passed legislation to reduce the gas tax rate from 14.7 cents per liter to 9 cents per liter. Also, the fuel tax rate, which applies to diesel, has been reduced from 14.3 cents per liter to 9 cents per liter, thus, representing a cut of 5.3 cents per liter. So this gas tax cut is applicable for six months, from July 1st  to December 31.

Impact of Gas Tax Cut on Vehicle Drivers:

Recently, Ontario Minister of Transportation, Caroline Mulroney:

“When the price of living has skyrocketed, our Government has taken decisive action by cutting the gas and fuel tax rate, eliminating license plate stickers and renewal fees, and removing tolls on Highways 412 and 418.”

The experts had predicted that a gas tax cut might offer some relief to drivers facing sky-high pump prices. And it’s true! Vehicle owners in Mississauga will now receive direct savings from the gas tax rates and the reduction and refunding of license plate renewal fees. License plate stickers are used by vehicle owners and have been a source of annual household expenses for decades. The cost of a renewal sticker is $120 per year per vehicle. So the gas tax cut will benefit households with an average combined savings of about $465 in 2022. The only thing is that one cannot predict the long-term benefits of a gas tax cut for the consumers.

Impacts on the Tourism Industry

In a May survey conducted by Leger:

Sixty-six percent of drivers said high fuel prices would prompt them to cancel or limit road trips this summer.

The gas tax cut benefits the tourism industry in Mississauga since reducing gas tax rates will promote tourism. The Chief Executive officer Chris Bloore of the Tourism Industry Association of Ontario President says it’s a positive step for a sector that has been hit with a twofold blow of the COVID-19 pandemic and increased prices. This way, the tax cut will allow families to travel and lengthen their stay. Mr. Bloore says:

“I’m confident that it’s going to mean those people who are considering changing their trip from two weeks to one week will go back to spending two weeks because the one thing that people have needed desperately for the last two and a half years is the ability to travel and get out and enjoy themselves again.”

Impact on Small Businesses

The tax cut is also excellent news for small businesses in Mississauga that faced difficulties throughout the pandemic. Ryan Mallough, the vice-president of Ontario legislative affairs, says that a reduction in fuel prices will benefit consumers and the shipments of goods belonging to small business owners.

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“The hope is that it takes a bit of pressure off consumers’ pocketbooks and allows them to spend a little bit more freely at businesses.”

Government’s Strategy Behind Gas Tax Cut

Cutting gas and fuel taxes is part of the Government’s ultimate strategy to provide quick cost-of-living relief. For example:

1. Relief for Vehicle Owners & Passengers

To deduct costs for millions of Ontario vehicle owners by refunding The renewal fee for license plate stickers paid since March 2020 and eliminating license plate renewal fees and plate stickers offers two benefits.

• The recent gas rates will save vehicle owners $120 a year in Southern Ontario.
• And $60 a year in Northern Ontario for passenger and light commercial vehicles.

The Impact Of The Recent Changes In Gas Prices

2. Removal of Highway Tolls

The reduction in gas rates have permanently removed the tolls on Highways 412 & 418.

3. Implementing Tax Relief through Tax Credits

Cutting off gas taxes and fuel prices is a part of the Government’s tax relief strategy for many people in Mississauga. For example, for workers, families, and seniors, the Low-Income Workers Tax Credit, the Senior Home Safety Tax Credit, the Ontario Jobs Training Tax Credit, and the Ontario Child Care Tax Credit.

4. Reduction in the cost of the Carbon Tax

To further help families and businesses, the Ontario government has taken the initiative to encourage the Federal Government to work with the province by reducing the carbon tax cost.

The Bottom Line!

If you’re a small business owner driving a car and using gas, the gas tax reduction will positively impact your bottom line. Of course, no one is certain whether prices will continue to rise, and some people believe that these recent changes in gas prices will encourage gas companies and customers alike to conserve their money, even if the price of gasoline falls. But the fact is that the recent changes in gas prices will be beneficial for the small business owners, vehicle drivers, and the tourism industry in Mississauga. For more information regarding the reduction in gas taxes, don’t hesitate to contact Yogi & Associates and get professional advice from our counselor.