Electric Vehicles: How Will the Government Recoup Lost Gas Taxes?

As more and more Canadians make the transition to electric vehicles, what is less certain is how governments will potentially recoup the billions of dollars lost in gas tax revenue.

The federal government collects about $6 billion a year in excise taxes on gasoline and diesel, not including GST or HST, according to an article in Pivot magazine, published by the Chartered Professional Accountants of Canada.

While a lot of the money goes into general revenue, some of the gas tax money goes into local infrastructure.

The federal government is committed to net zero emissions by 2050 and also requires all new light car and truck sales to be zero emissions by 2035.

Sherena Hussain, a professor at York University’s Schulich School of Business, told CTV’s Your Morning Thursday that the loss of that revenue could be significant, depending on how quickly Canadians switch to electric vehicles.

Compensation for this loss could come in the form of new taxes, as in charging stations, Hussain said.

But how quickly the transition from gasoline-powered to electric vehicles happens, she added, will depend on the availability of charging infrastructure and affordable, low-cost electricity.

“Whether governments are able to do this or not, and support different private industries like we are doing, really raises the question of the need to spend more in the short term to facilitate the long term need to move us towards lower-emission vehicles,” she said.

Watch the full interview with Sherena Hussain at the top of the article.

About Mohammed B. Hale

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