Newfoundland and Labrador's government has introduced legislation that removes the provincial tax on gasoline and diesel, and then hands the question of whether to bring it back to the price of oil.
The details were tabled on Thursday at the House of Assembly, CBC News reported. The provincial tax will drop to zero from 1 December 2026 and stay there through 31 March 2027. The tax break itself was announced on Monday.
The tax is currently 7.5 cents a litre on gasoline and 9.5 cents a litre on diesel, the government said in a statement. The cut applies to both fuels.
What is new in the bill is what happens after March. Rather than return to the legislature each time the oil price moves, the government has written a standing review into the law itself.
Before each calendar quarter - on the 16th of December, March, June and September - the government will look at a 20-day average of Brent crude spot prices in US dollars, rounded to the nearest cent. That number will determine whether the tax is charged at the pumps.
The threshold will be set in regulations, initially at US$89 a barrel. "So if that [oil price] stays high, above that, then we keep this gas tax off," Premier Tony Wakeham told reporters outside the legislature. He said the amendments mean the legislature will not have to make further changes as prices rise and fall in order for the tax to stay off, or to return.
Finance Minister Craig Pardy said the timing of the check-ins reflects the time the Public Utilities Board needs to work through any changes. He said the government had looked at Alberta, whose benchmark is $90 but is tied to West Texas Intermediate, a grade more closely linked to that province's industry and revenues. "So we're pretty comfortable with $89," the minister said. "Again, taking the politics out of this. Now it will be in legislation that this is the way we'll operate."
The Liberals said the relief should have arrived much earlier and should be made permanent. "And we think it should just be taken off permanently," Liberal Leader John Hogan said on Thursday, arguing that the arrangement leaves residents of the province without certainty going forward.
It is worth being exact about what the bill does. It does not set the gas tax. It establishes a procedure for reading a number, and the number is a twenty-day average of the price of a grade of North Sea oil.
The finance minister's description is, on that reading, entirely accurate. The politics have been taken out of this. They have been replaced by Brent crude, which now holds the deciding vote on a provincial tax four times a year, on the 16th of four months, and which cannot be lobbied, briefed, petitioned or asked to reconsider.
Its mandate is narrow but absolute. Above US$89 a barrel, the tax is off. Below it, the tax is on. The average is rounded to the nearest cent, so a half-cent movement in the price of a barrel of oil will decide whether 7.5 cents a litre is collected from every driver in the province.
This is a considerable delegation of authority to a commodity with no fixed address. The Department of Unnecessary Research notes that Brent crude has never stood for election, has filed no expenses, holds no constituency office, and will not be required to attend the House of Assembly on the four mornings a year when it settles fiscal policy.
There is a certain symmetry to the design. Provincial revenues move with the oil price, so the tax comes off precisely when the province can afford to lose it and returns precisely when it cannot. The mechanism is self-correcting, in the sense that it corrects itself and consults nobody else.
Officials may still need to settle one procedural question. If a motion is ever brought to amend the provincial gas tax, it is no longer entirely clear to whom it should be addressed.