Yes, Carbon and Other Taxes Make Gas Ridiculously Expensive

Robert P. Murphy – June 6, 2018

Supporters of carbon taxes like to tell Americans not to worry, that people warning about “Big Government” are scaremongers, and that we can certainly trust political officials to calibrate taxes based on the scientific recommendations of economists in white lab coats. Yet recent news out of British Columbia shows just how aggressive the government can get, if given permission to tax an “inelastic” good like gasoline.

Specifically, residents of Vancouver are shell-shocked by recent record-setting gas prices:

(Source: Ted Field, Global News)

The featured price of 161.9 means $1.619 (Canadian) for a liter of gasoline, which works out to about $6.13 per gallon (measured in U.S. gallons, not Imperial gallons), which is about $4.80 per gallon if we convert to U.S. dollars. In contrast, as of this writing the average U.S. price is about $2.80 per gallon.

Why are gas prices hitting record highs in Vancouver? Part of the explanation is the weak Canadian dollar, but another component is the tax bite: First there’s the $35 per ton carbon tax—which automatically increases by $5 per ton each year—that translates into 7.78 cents per liter. Then Metro Vancouver also levies a 17 cent per liter fuel tax (ostensibly for regional roads and transit). In combination with other provincial and federal taxes, the total tax bite works out to about 50 Canadian cents per liter, or about $1.50 (U.S.) per gallon.

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