Claim exaggerates fuel tax rates in Australia and Canada

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 (Read an archived version of the previous check.)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

With record-high inflation rates around the world and gas prices still high, consumers’ wallets have been hit hard. But some social media posts have exaggerated the drain these high prices have had on people’s paychecks.

An April 9 Facebook post claimed that most of a person’s income was being taxed by the government, rather than going toward goods or services. A similar post was shared by a different account on April 16.

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

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

While the claims don’t explicitly say in which country this alleged 48% fuel tax exists, 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 has advocated for a lower gas tax. The second Facebook post, shared on April 16, does not include this reference to Australia.

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

The mention of a goods and services tax indicates this claim is not about the United States, as it has no national sales tax. 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 water in either location.

To be sure, the cost of crude oil, wholesale margins, retail margins and taxes all factor into the total price consumers pay at the pump. However, when it comes to both Australia and Canada, these claims misconstrue how much taxes account for the price consumers pay for gas. The claim also lacks context about income tax rates, no matter which of the two countries we consider.

In Australia, income tax varies depending on how much a person makes. So, there are some Australians who are subject to a 33% income tax rate. Those earning between $45,001 and $120,000 pay $5,092 plus 33% of each $1 over $45,000 in income taxes. Individuals earning less than that pay a lower rate or no income tax at all, and people earning more pay a higher rate. (One Australian dollar is equal to about 72 cents in the U.S.)

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

Australia typically has a fuel excise tax of 44.2 cents per liter, but that rate was recently cut in half to help lower the cost of gas for consumers. The country also applies a 10% goods and services tax (GST) to gas purchases.

If the GST is included in the total $67 gas purchase, then the tax would equal one-eleventh of the total purchase, or $6.09. That means the consumer spent $60.91 on gas before the GST was applied, according to the Australian government’s GST calculator.

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

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

But the current fuel excise rate is much lower. Starting March 30 until Sept. 28, the Australian government cut the fuel excise tax in half to 22.1 cents per liter. During this time, the amount of fuel taxes paid on a $60.91 gas purchase would be $6.85. Along with the GST, the consumer would pay a total of $12.94 in taxes, accounting for 19% of the purchase.

In Canada, individuals earning less than $50,197 are subject to a 15% federal income tax. If a person makes more than that amount, they are subject to higher income tax rates depending on their amount of taxable income. Only individuals earning more than $221,708 are subject to a 33% income tax. (One Canadian dollar is equal to about 78 cents in the U.S.)

All 13 provinces and territories in Canada also have their own income tax rates. None of these rates alone are as high as 33%, even for the highest earners. But depending on where a person lives and how much they make, the federal and provincial income tax rates may together equal 33% or more.

However, similar to Australia, the claim that Canadians pay a 48% fuel tax is exaggerated.

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

The federal gas tax is fixed at 10 cents per liter. Provincial gas taxes range from 6.2 cents per liter to 27 cents per liter. The carbon tax ranges from 1.1 cents to 11.05 cents. (In certain parts of Canada, individuals are eligible to receive a quarterly 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 federal GST of 5% on gas purchases, while the other six pay a higher harmonized sales tax (HST), which combines the federal GST with the provincial sales tax (PST).

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

Vancouver is in British Columbia, which applies the federal GST of 5% to gas purchases. For a total purchase of $67, the GST would equal $2.99. That means the consumer spent $64.01 on gas before the GST was applied, according to the Canadian government’s GST calculator.

The average price of gas in Canada was $1.90 per liter on April 4. So with $64.01 a person in Vancouver could buy about 33 liters of gas.

That 33 liters would be subject to a 10-cent per liter federal gas tax, a 27-cent provincial gas tax and an 11.05-cent carbon tax, totaling $15.86. After adding the GST, the total taxes paid to the Canadian government would be $18.85, or 28% of the $67 gas purchase. People living in other parts of the country, where the tax rates are lower, would pay less in taxes.

Some parts of Canada are lowering certain gas taxes to give consumers a break while the price of oil is high. For example, last month Alberta dropped its provincial fuel tax of 13 cents per liter while the price of U.S. crude oil remains above $90 a barrel. Starting July 1, Ontario will reduce its provincial gas tax by 5.7 cents, so the rate through the end of the year will be 9 cents per liter.

Two recent Facebook posts claimed: "If you earn $100 and pay $33 income tax you’re left with $67. You then buy $67 worth of fuel and in doing so pay a 48% fuel tax (fuel tax = $32.16 + $6.70 GST). This means that the government just got $71.86 tax from your hard earned $100."

Since the Facebook posts did not include how much money this hypothetical person makes a year, it’s not possible to determine their income tax rate in Australia or Canada.

Also, neither country has a 48% fuel tax.

We rate this claim Mostly False.