Wakeham reissues pledge to make gas tax reduction permanent as fuel prices rise

As drivers in Newfoundland and Labrador face a steep jump in fuel prices this week, Premier Tony Wakeham said the government is committed to making a reduction in the provincial gas tax permanent.

"We brought in legislation last week ...to make it a permanent reduction," Wakeham told reporters Tuesday. "That's being debated in the House right now."

The gas tax reduction, introduced by the former Liberal government, lowered the tax people pay on gas by 8.05 cents per litre. That reduction is supposed to expire on April 1, which would revert the tax to 14.5 cents per litre for gas and 16.5 cents per litre for diesel.

The discussion in the House of Assembly comes following a large jump in the price of gas, diesel and home heating fuels, driven by the war in the Middle East.

Gas prices in Newfoundland and Labrador increased by 19.1 cents per litre in a two-day period at the end of last week.

As part of the Progressive Conservative election campaign in the fall, Wakeham committed to permanently removing the tax while also promising to review all taxes and fees to see what could be reduced.

When asked Tuesday if the gas tax reduction could drop further, Wakeham said the province would look to the federal government to see what might be possible.

"This isn't a problem just for Newfoundland and Labrador," he said. "And it's not just the price of gas, it's the impact it will have on food and transportation, all those issues."

Liberal Opposition Leader John Hogan said he believes the reduction can go further. The Liberals plan to introduce an amendment to legislation surrounding the gas tax to show it's possible, he added.

"He was very clear that the government does have levers to pull in situations like this, and I think those levers should be pulled right now," Hogan said, citing Wakeham's time in opposition.

With such a sharp increase in pricing this week, it might leave you questioning how prices can increase by so much so quickly.

According to Dan McTeague, president of Canadians For Affordable Energy, it comes down to the implementation of replacement cost.

Gas stations don't charge on what they paid for gas when their tank was filled, he said, instead charging the price it would take to fill the tanks today.

And as oil infrastructure in the Middle East is targeted, and the Strait of Hormuz — which is used to get about 20 per cent of the world's oil to market — is closed because of the conflict, it makes crude more scarce around the world.