Allegation exaggerates fuel tax rates in Australia and Canada

UPDATE: This fact check replaces and expands on a previous fact check that only focused on gasoline taxes in Canada. (Read an archived version of the previous check.) We decided to review the check after readers asked us about petrol taxes in Australia, while other readers questioned our analysis on the Canadian law. The previous verification concluded that the statement was false; we now evaluate the Mostly false statement.

With record inflation rates around the world and fuel prices still high, consumer wallets have been hit hard. But some social media posts have exaggerated the drain those high prices have taken on people’s paychecks.

A Facebook on April 9 Publish claimed that most of a person’s income was taxed by the government, rather than going towards goods or services. A similar Publish was shared by another account on April 16.

“If you earn $100 and pay $33 in income tax, you’re left with $67. You then buy $67 worth of fuel and in doing so, you pay 48% fuel tax (fuel tax = $32.16 + $6.70 GST). This means the government got $71.86 in tax on your hard-earned $100,” the Facebook posts claimed.

These posts were flagged as part of Facebook’s efforts to combat fake news and misinformation on its News Feed. (Learn more about our partnership with facebook.)

While the claims don’t explicitly say which country this alleged 48% fuel tax exists in, there is fine print at the bottom of the April 9 Facebook post that references Pauline Hanson, a right-wing populist politician in Australia. who pleaded for a lower gas tax. The second Facebook post, shared on April 16, does not include this reference to Australia.

The claims could also pertain to Canada, as users who shared the two posts state on their Facebook profiles that they are based in that country.

The mention of a goods and services tax indicates that this statement does not apply to the United States, as they do not have a national sales tax. Both the Australian and Canadian governments do – and they also use a dollar sign for currency – so we looked at both countries to see if the claim holds up in either place.

Certainly, the cost of crude oil, wholesale margins, retail margins and taxes are all factors in the total price consumers pay at the pump. However, when it comes to both Australia and Canada, these claims misinterpret the amount of taxes that explain the price consumers pay for gasoline. The request also lacks context on income tax rates, regardless of the country we consider.

Australian income and fuel taxes

In Australia, income tax varied depending on how much a person earns. Thus, some Australians are subject to an income tax rate of 33%. Those earning between $45,001 and $120,000 pay $5,092 plus 33% of every $1 over $45,000 in income tax. People who earn less than that pay a lower rate or no income tax, and people who earn more pay a higher rate. (One Australian dollar is approximately 72 cents in the United States)

But Australian fuel taxes are lower than the 48% mentioned in the claim.

Australia generally has a fuel excise tax 44.2 cents per litre, but this rate was recently halved help reduce the cost of gas for consumers. The country also applies a 10% Goods and Services Tax (GST) on gasoline purchases.

If the GST is included in the total gasoline purchase of $67, the tax would be equal to one eleventh of the total purchase, or $6.09. This means the consumer spent $60.91 on petrol before GST was applied, according to the Australian government. GST Calculator.

the average gas price in australia was $1.93 per liter on April 8. (There are about four liters in a gallon.) So, for $60.91, a person could fill up their car with about 31 liters of fuel. (The typical car can hold between 45 and 65 liters of gasoline.)

These 31 liters would normally be subject to a fuel excise tax of 44.2 cents per liter or $13.70 in total. Combined with the GST, the total taxes would equal $19.79, or about 30% of a $67 gas purchase.

But the current excise rate on fuel is much lower. From March 30 to September 28, the Australian government cut fuel excise tax in half at 22.1 cents per litre. During this period, the amount of fuel taxes paid on a gasoline purchase of $60.91 would be $6.85. In addition to the GST, the consumer would pay a total of $12.94 in taxes, which represents 19% of the purchase.

Income and fuel taxes in Canada

In Canada, individuals earning less than $50,197 are subject to a federal income tax of 15%. If a person earns more than this amount, they are subject to higher tax rates based on their taxable income. Only individuals earning more than $221,708 are subject to a 33% income tax. (One Canadian dollar is approximately 78 cents in the United States)

Canada’s 13 provinces and territories also have their own income tax rates. None of these rates alone reaches 33%, even for the highest earners. But depending on where a person lives and how much they earn, the federal and provincial tax rates together can add up to 33% or more.

However, as in Australia, the claim that Canadians pay a 48% fuel tax is overstated.

Gas purchases in Canada are subject to four types of taxes: a federal gasoline tax, a provincial gasoline tax, a carbon tax and a sales tax.

The federal gasoline tax is set at 10 cents per litre. Provincial gasoline taxes range from 6.2 cents per liter to 27 cents per litre. The carbon tax ranges from 1.1 cents to 11.05 cents. (In some parts of Canada, individuals are eligible to receive a climate action incentive tax benefit to help offset the cost of federal pollution pricing.)

The sales tax applied after these fuel taxes varies depending on where a person lives in Canada. Seven provinces and territories pay the 5% federal GST on gasoline purchases, while the other six pay a higher Harmonized Sales Tax (HST), which combines federal GST and provincial sales tax (PST).

Drivers in Vancouver, compared to other cities and provinces in Canada, pay the most taxes on gas purchases. East Vancouver one of the three cities in Canada that adds a municipal gas tax.

Vancouver is in British Columbia, which applies the 5% federal GST on gasoline purchases. For a total purchase of $67, the GST would equal $2.99. This means that the consumer spent $64.01 on gasoline before GST was applied, according to the Canadian Government GST Calculator.

the average gasoline price in Canada was $1.90 per liter on April 4. Thus, with $64.01, a person in Vancouver could buy approximately 33 liters of gasoline.

These 33 liters would be subject to a federal gasoline tax of 10 cents per litre, a provincial gasoline tax of 27 cents and a carbon tax of 11.05 cents, for a total of 15.86 $. After adding the GST, the total taxes paid to the Canadian government would be $18.85, or 28% of the gas purchase of $67. People who live in other parts of the country, where tax rates are lower, would pay less tax.

Some parts of Canada are reducing some gasoline taxes to give consumers a break from high oil prices. For example, last month Alberta dropped its provincial fuel tax 13 cents per liter while the price of US crude oil remains above $90 per barrel. Effective July 1, Ontario reduce its provincial gas tax 5.7 cents, so the rate through the end of the year will be 9 cents per litre.

Our decision

Two recent Facebook posts claimed, “If you make $100 and pay $33 in income tax, you have $67 left. You then buy $67 worth of fuel and in doing so, you pay 48% fuel tax (fuel tax = $32.16 + $6.70 GST). That means the government just got paid $71.86 in tax on your hard-earned $100.”

Since the Facebook posts did not include the amount of money this hypothetical person earns per year, it is not possible to determine their income tax rate in Australia or Canada.

Moreover, neither country applies a fuel tax of 48%.

We rate this claim primarily false.

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