Sylvie Willis
In Canada, motor vehicles are typically powered by gasoline or diesel fuel, with other energy sources including ethanol, biodiesel, propane, and compressed natural gas. Canada levies excise taxes and other taxes on gasoline, diesel, and other liquid and gas motor fuels, collectively called fuel taxes. Most provinces and territories in Canada also have taxes on these motor fuels, and some metropolitan areas such as Vancouver impose additional taxes. In the province of British Columbia (BC), the tax rates for motor fuel tax and carbon tax vary depending on the type of fuel and whether the fuel is clear or coloured. As of 2019, the total tax on gasoline in Vancouver was 54 cents per litre, while the rest of BC paid 41 cents per litre.
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What You'll Learn
Provincial motor fuel tax
In British Columbia, the Provincial Motor Fuel Tax rate varies by region, with proceeds going towards general revenue. The tax rate for Metro Vancouver is 1.75 cents per litre, while for the rest of British Columbia, it is 7.75 cents per litre.
In addition to the Provincial Motor Fuel Tax, there are also dedicated taxes that apply in certain regions of the province. The dedicated tax on clear gasoline and clear diesel purchased anywhere in British Columbia is 6.75 cents per litre. However, if purchased inside the South Coast British Columbia Transportation Service Region (SCTA), which includes Metro Vancouver, the dedicated tax increases to 18.50 cents per litre. On the other hand, if clear gasoline or clear diesel is purchased inside the Victoria Regional Transit Service Area (VRTA), the dedicated tax is 5.50 cents per litre.
The Provincial Motor Fuel Tax also applies to other types of fuel, such as locomotive fuel, marine diesel, and marine bunker fuel. The total tax rate for locomotive fuel and marine diesel is 23.74 cents per litre, while the rate for marine bunker fuel is slightly higher at 25.50 cents per litre.
It's important to note that the tax rates mentioned above were accurate as of April 1, 2025, when the BC carbon tax was eliminated. The carbon tax previously added an average of 14 cents per litre to gasoline and 15 cents per litre to diesel in British Columbia.
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Carbon tax
In the Canadian province of British Columbia (BC), a carbon tax is levied on the purchase or use of fuels such as gasoline, diesel, natural gas, heating fuel, propane, and coal. This tax is applied in addition to the motor fuel tax and varies depending on the type of fuel and whether it is clear or coloured. For example, the total tax rate on coloured gasoline is 20.61 cents per litre, while the rate for coloured diesel is 23.74 cents per litre. The carbon tax rate for all fuel types is applied consistently across BC, regardless of the location of purchase or intended use.
The carbon tax also applies to combustibles, such as peat, tires, and asphalt shingles, when they are burned to produce heat or energy. The proceeds from the carbon tax are used to fund various programs and initiatives. For instance, in 2022, the BC government collected over $2.5 billion in fuel and carbon taxes, which are intended for projects like road repair and construction.
The carbon tax rate in BC has been a subject of debate, with critics arguing that high gasoline taxes unfairly burden individuals who rely on driving for daily activities. In April 2025, the BC government eliminated the carbon tax, which was previously set at 8.89 cents per litre of gasoline. This change was implemented in response to decreasing oil prices and aimed to alleviate the financial strain on BC residents.
It is worth noting that, in addition to federal and provincial fuel taxes, metropolitan areas in BC, such as Vancouver and Victoria, may impose additional taxes on fuel. These taxes contribute to funding public transportation and infrastructure projects within their respective regions. As of 2019, Vancouver had the highest gasoline taxes in Canada, with taxes amounting to 54 cents per litre of gasoline.
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Federal excise tax
Canada levies excise taxes on gasoline, diesel, and aviation fuel. Excise taxes are collected at various administrative levels, including federally, provincially, and municipally. The federal government collects about $5 billion per year in excise taxes on gasoline, diesel, and aviation fuel, with $2 billion going into the annual Gas Tax Fund for municipal infrastructure.
The federal excise tax on fuel in British Columbia (BC) is 10 cents per litre. This is in addition to other taxes such as the provincial motor fuel tax, carbon tax, and the Goods and Services Tax (GST). The carbon tax rate for all fuel types is applied consistently throughout BC, regardless of where it is purchased or how it is used. The total tax rate on coloured gasoline in BC is 20.61 cents per litre, while the total tax rate on coloured diesel is 23.74 cents per litre.
The tax rates for motor fuel tax and carbon tax vary depending on the type of fuel and whether it is clear or coloured. In some cases, the tax rates also differ based on the region of purchase and how the fuel is used. For example, the dedicated tax on clear gasoline and clear diesel purchased anywhere in BC is 6.75 cents per litre, but this rate increases to 18.50 cents per litre in the South Coast British Columbia Transportation Service Region (SCTA) and 5.50 cents per litre in the Victoria Regional Transit Service Area (VRTA).
The federal excise tax is just one component of the total tax burden on fuel in BC. When considering the various taxes applicable to fuel, it is important to examine the overall impact on consumers and the economy. The high taxes on fuel in BC have been criticised for punishing people who depend on fuel for their daily activities, such as commuting to work or school and buying groceries. Additionally, the carbon tax component of the fuel tax is intended to promote environmental goals by discouraging the use of fossil fuels and encouraging the adoption of more sustainable energy sources.
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Goods and Services Tax
In British Columbia, the Goods and Services Tax (GST) is levied on gasoline and diesel, with the Government of Canada collecting approximately $1.6 billion per year in GST revenues on these fuels. This federal tax is applied across the country and is separate from the provincial sales tax (PST) collected by some provinces, including British Columbia.
The GST adds to the overall tax burden on fuel in British Columbia, which includes various provincial and dedicated taxes. The provincial motor fuel tax rates vary depending on the region, with Metro Vancouver having a lower rate of 1.75 cents per litre compared to 7.75 cents per litre in the rest of the province. Additionally, there are dedicated taxes that apply in certain regions, such as the South Coast British Columbia Transportation Authority (TransLink) tax of 18.5 cents per litre in Metro Vancouver and the Transit tax of 5.5 cents per litre in Victoria.
The carbon tax is another significant component of fuel taxation in British Columbia. It applies to the purchase or use of fuels such as gasoline, diesel, natural gas, and heating fuel. The carbon tax rate for all fuel types is applied consistently throughout the province. As of 2019, the carbon tax rate in British Columbia was 8.89 cents per litre, contributing to the high fuel taxes in the province.
While the GST on fuel in British Columbia remains in place, there have been recent changes to other fuel taxes. On April 1, 2025, the BC carbon tax was eliminated. Additionally, the federal fuel charge was set to zero as of the same date, impacting several provinces and territories in Canada. These changes may have resulted in adjustments to the overall tax structure on fuel in British Columbia, including the GST. However, the GST itself is a federal tax applied across the country, and any changes to it would be part of broader tax policy decisions made by the federal government.
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Tax on renewable fuels
In the province of British Columbia, motor fuel tax and carbon tax apply to renewable fuels as follows:
- Biodiesel, renewable diesel, and straight vegetable oil (SVO) are taxed at the same rate as clear diesel (light fuel oil - diesel).
- Motor fuel tax and carbon tax apply to blendstocks such as conventional blendstock for oxygenate blending (CBOB) and reformulated blendstock for oxygenate blending (RBOB) at the same rates as clear gasoline, unless an exemption applies.
- Other fuels purchased for use in an internal combustion engine are taxed at the same rate as clear gasoline.
- The total tax rate on coloured gasoline is 20.61 cents per litre.
- The total tax rate on coloured diesel is 23.74 cents per litre.
The tax rates for motor fuel tax and carbon tax vary depending on the type of fuel, whether it is clear or coloured, and the region of purchase. In some cases, the tax rates also differ based on how the fuel is used. For example, the dedicated tax on clear gasoline and clear diesel purchased anywhere in British Columbia is 6.75 cents per litre, while the rate increases to 18.50 cents per litre when purchased inside the South Coast British Columbia Transportation Service Region (SCTA) and 5.50 cents per litre in the Victoria Regional Transit Service Area (VRTA).
Additionally, British Columbia's Low Carbon Fuel Standard (LCFS) encourages the use of renewable and low-carbon fuels by offering incentives to organizations that supply them. These incentives are based on the reduction in greenhouse gas emissions achieved by these fuels compared to conventional fuels.
As of April 1, 2025, the BC carbon tax was eliminated. However, the motor fuel tax remains in effect.
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Frequently asked questions
The fuel tax rate in British Columbia (BC) varies depending on the type of fuel and whether it is clear or coloured. The total tax rate on coloured gasoline is 20.61 cents per litre, and the total tax rate on coloured diesel is 23.74 cents per litre. The tax rate on locomotive fuel and marine diesel is 23.74 cents per litre, while the tax rate on marine bunker fuel is 25.50 cents per litre.
Yes, in addition to the motor fuel tax, there is also a carbon tax on fuel in BC. The carbon tax rate is applied consistently throughout the province, regardless of where the fuel is purchased or how it is used. The carbon tax adds an average of 14 cents per litre to the cost of gasoline and 15 cents per litre to the cost of diesel. There are also dedicated taxes that apply in certain regions of BC, such as the South Coast British Columbia Transportation Authority (TransLink) tax and the Victoria regional transit service area (VRTA) tax.
BC has the highest gasoline taxes in Canada, with Vancouver drivers paying 54 cents in taxes per litre of gasoline. The rest of BC pays 41 cents in taxes per litre of gasoline, while Victoria has a pump price tax of 47 cents per litre. In comparison, Quebec conducted an Ipsos poll in 2022 that found that 73% of the population thought that the taxes levied on fuel were too high.
Yes, there are some exemptions to the fuel tax in BC. If fuel (except propane) is sold for use other than in an internal combustion engine, the motor fuel tax does not apply as long as specific invoicing and other requirements are met. Additionally, individuals with disabilities may be eligible for the fuel tax refund program to help reduce their transportation costs.
