Mark Carney has promised a gas tax cut. There’s a better solution to our energy cost woes.

[Sid Shniad]

https://archive.li/nFoXW

Toronto Star                                                                                                                                                                                  April 15, 2026

Mark Carney has promised a gas tax cut. There’s a better solution to our energy cost woes

A cut to the gas tax is far less fair and equitable than a windfall tax.

Getty Images/Ed Jones via AFP

By Seth Klein, Contributor
Seth Klein is a climate writer and campaigner, and author of “A Good War: Mobilizing Canada for the Climate Emergency.”

As in the past, a war against a country in the Middle East appears to be lasting considerably longer than its US protagonists initially claimed. And even if this ostensible “ceasefire” between America and Iran holds, gas prices will remain painfully high for a while.

And once again, fossil fuel companies are destined to make a killing.

As with the COVID pandemic and Russia’s invasion of Ukraine, corporations will seize on the excuse of supply chain disruptions to make out like bandits, first and foremost the oil and gas companies. War profiteering is always the way, unless policy puts a stop to it.

As we emerged from the pandemic, oil and gas companies recorded record profits, resulting in a growing chorus to tax these windfall “earnings.” Some European countries did just that. But then, as oil prices came back down, the idea lost currency.

It’s time to revive the call.

The Financial Times reports that Canada’s oil producers are in line to land $90 billion in windfall profits due to the Iran war. According to modelling by the research firm Enverus, “Canadian companies will generate an extra $25-$30bn in revenue for every $10 rise in oil prices this year following the market turmoil caused by the conflict.”

While the mayhem in global energy markets will no doubt be a boon to Canada’s oil patch and a saving grace for the Alberta budget, for the rest of us, the oil price spike will ripple through the economy and make life even more unaffordable. That’s why these excess profits need to be captured for the public good.
By not taxing these windfalls, much of the profits are leaving the country. Political economist Gordon Laxer notes, “oil corporations in Alberta and Canada are overwhelmingly foreign-owned,” mainly by Americans.

The windfall from spikes in the price of oil also overwhelmingly go to the wealthy, producing a hidden redistribution from lower-income households to the super rich. A study by University of Massachusetts Amherst economists Isabella Weber and Gregor Semieniuk found that the price shock triggered by Russia’s invasion of Ukraine resulted in the 2022 net income of publicly listed oil and gas companies reaching $916 billion globally, “a figure more than three times that of the preceding years (even excluding 2020).” Moreover, within the US, they found, “50 per cent of all fossil fuel profit claims accrued to the wealthiest 1 per cent of individuals. The bottom 50 per cent of the population … received 1 per cent.”

Their solution: “a permanent excess profit tax on oil and gas, defined as returns above a specified threshold.”

Why a special excess profits tax? Effectively, it functions as an additional tax bracket on corporate income. The point of an excess (or windfall) tax — first instituted during the Second World War to prevent the grotesque profiteering that had plagued the First World War — is that when exceptional circumstances lead to profits well outside the norm, a special tax should apply.

Politically, a windfall profits tax is a winner. First, it is hugely popular; polling conducted two years ago found 62 per cent of Canadians support such a tax. Second, the climate movement would be thrilled. Third, a windfall profits tax on oil and gas could raise roughly $1 billion a year (or considerably more, depending on the rate and the price of oil). And fourth, a windfall profits tax would bring on a good fight with the Conservatives; let Pierre Poilievre explain why he doesn’t want to impose this tax on some of the most profitable corporations in human history.

For his part, Poilievre’s response to the oil price shock is to call for a suspension of all federal gas taxes, and now the Carney government has partially concurred. This is a terrible idea that only rewards the gangsters. If history is any indication, there is a high risk these corporations will just hoover up such tax cuts and consumers will see no impact at the pump.

In contrast, taxing the oil and gas companies’ profits means we can deploy some of those revenues to directly help lower and modest-income households, while using some to expedite our transition off these deadly fuels.