'Every dollar counts': Ontario's gas and fuel tax cut goes into effect

Ontariodrivers experienced some relief from record-setting prices at the pump on Friday as the province's gas tax cut came into effect.

TheOntariogovernment cut the gas tax by 5.7 cents per litre until the end of the year, though Premier Doug Ford said he would consider an extension if inflation remains high.

Drivers noticed the impact Friday at gas stations in the Toronto-area, where prices dropped around 11 cents overnight to $1.93 only partly attributable to the tax cut.

"Every dollar counts," said Matthew Johnston as he filled up a cargo van at a downtown Toronto gas station. "This will actually help a bit."

Gas prices in Toronto are up nearly 40 per cent since the start of the year, reaching a record high $2.15 per litre in early June before ending the month around $2.00 per litre.

Cut also applies to diesel

Johnston, who runs an upstart catering business and works at a winery, says the soaring price of gas paired with inflation has forced him to cut back on spending.

"I haven't been able to go out or do anything anymore. It's honestly just all gone to gas, rent you know, just the cost ofliving," he said.

The tax cut is expected to cost the province $645 million while it's in effect. Analysts note Ford may face a tough decision in December when the measure expires and with prices likely to rise again before Christmas.

The legislation passed this spring will also cut fuel tax, which covers diesel, by 5.3 cents per litre until Dec. 31.

Hermain Kazmi called the tax cut a move in the right direction as he pumped gas into his car. He said high gas prices recently pushedhim to use more public transit, but he expected to return to his previous driving habits if prices came down.

Kazmi was "100 per cent" in support of the government extending the tax cut into 2023, even expressing the hope it could lead to more financial relief.

"I don't think a 10 cent drop would make a huge impact. It's a good change but I think it needs to come down lower depending on howmuch inflation is and how salaries have not matched how inflationhas gone up," he said.

Price tied to increased demand, invasion of Ukraine

The soaring price of gas, a key driver of inflation, is tied to an increased demand for oil as the economy reopens after the COVID-19 pandemic. The situation has also been exacerbated by a global supply crunch caused in part by Russia's invasion of Ukraine.

Ali Avali stopped to fill up his SUV on the way to a park outside Toronto, with his dog, an Alaskan Malamute, perched in the backseat.

"The only reason I drive is because of this guy. I take him out to do a bit of running in the country," he said.

Once the loan is paid off on the SUV, Alavi said he plans to switch to an electric vehicle. He said he opposed a gas tax cut,suggesting that if prices continued to go up, more people may alsobe inclined to make the switch.