Where some of your gas tax money goes

Dec 03, 2015   | Categories: Economy, Energy
Canadian Fuels has recently published its FUEL 2015 Annual Sector Review, entitled Perspectives (PDF), which provides a broad range of perspectives and insights from academics, researchers, independent journalists and industry experts on transportation fuels and our industry today, and into the future. This blog post is adapted from the report’s article on Canada’s Gas Tax Fund (p. 20), entitled Powering Prosperity.


Canadian drivers know they pay taxes on fuel every time they fill up their tanks. But where does the money go?

Some of the funds go directly into government coffers. However, what many people don’t realize is that a portion of those taxes is returned to the communities they call home.

In 2005, the federal government launched the Gas Tax Fund (GTF), which provides a portion of fuel tax to provinces and territories. In turn, the regional governments flow funds to municipalities to help pay for infrastructure projects.

It’s a significant amount. In the last 10 years, Canadian governments have collected more than $185 billion in petroleum fuel taxes, and so far, $13 billion has been returned to towns and cities across the country. Another $10.4 billion is expected to be allocated by 2018-2019, and by 2025, a total of $22 billion will be shared.

The point of the federal GTF, says Infrastructure Canada, is to provide “predictable, long-term, stable funding for Canadian municipalities to help them build and revitalize their local public infrastructure while creating jobs and long term prosperity.”

How does it work?

The program was originally designed to provide municipalities with $5 billion in predictable funding over five years. It was recently extended and the annual contribution was doubled from $1 billion to $2 billion annually.

In 2013, the GTF became a permanent source of federal infrastructure funding for municipalities. Now, the fund increases at a rate of two per cent per year, which means it will grow by $1.8 billion over the next decade, says Infrastructure Canada.

Provinces and territories receive the money twice a year, and then pass it on to municipalities. They, in turn, can pool the funds, bank them or borrow against them, which offers flexibility to the towns and cities.

What does it pay for?

The funds have already been used for waste water and transit programs, among others.

Communities are able to use the federal GTF toward:

  • public transit
  • wastewater infrastructure
  • drinking water
  • solid waste management
  • community energy systems
  • local roads and bridges
  • capacity building
  • highways
  • local and regional airports
  • short-line rail
  • short-sea shipping
  • disaster mitigation
  • broadband and connectivity
  • brownfield redevelopment
  • culture
  • tourism
  • sport
  • recreation

Under the renewed GTF, allocations to provinces and territories from 2014-2019 are based on census data. They are as follows:


Jurisdiction GTF Allocation
Newfoundland and Labrador $155,298,305
Prince Edward Island $78,000,000
Nova Scotia $276,775,682
New Brunswick $225,275,924
Quebec $2,382,738,448
Ontario $3,873,734,778
Manitoba $340,447,890
Saskatchewan $292,707,395
Alberta $1,084,982,788
British Columbia $1,317,039,837
Yukon $78,000,000
Northwest Territories $78,000,000
Nunavut $78,000,000
First Nations $138,998,953
Canada $10,400,000,000


To learn more about the gas you rely on to fuel your vehicle, check out these blog posts:

And find out more about the factors behind gas prices, and how Canadian cities and regions pay different levels of taxes.

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