Electric vehicles: How will govt’s recoup lost gas taxes?

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

The federal government collects approximately $6 billion annually in gas and diesel excise taxes, not including GST or HST, a report from Chartered Professional Accountants Canada says.

While much of the money goes into general revenue, some of the gas tax money goes toward local infrastructure.

The federal government has committed to achieving net-zero emissions by 2050 and is also requiring all new light-duty cars and passenger trucks sales to be zero-emission by 2035.

Sherena Hussain, an instructor at York University’s Schulich School of Business, told CTV’s Your Morning on Thursday that losing this revenue could be significant, depending on how fast Canadians shift to electric vehicles.

Making up that loss could come in the form of new taxes such as at charging stations, Hussain said.

But how fast the transition from gas-powered vehicles to electric ones occurs, she added, will depend on the availability of charging infrastructure and low-cost, affordable electricity.

“Whether or not the governments will be able to do so, and support different private industries as we do, really begs the question of needing to spend more in the short term in order to facilitate the need in the long term of us transitioning towards lower -emission vehicles,” she said.

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

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