On May 7, 2021, Bill 34, The Fuel Tax Amendment Act, 2021 passed the third reading in the Legislative Assembly of Saskatchewan. Bill 34 amends Saskatchewan's The Fuel Tax Act, 2020 and The Financial Administration Act, 1993 to introduce a new road use charge for electric vehicles (EVs). While similar charges have been introduced in certain U.S. states, this is the first tax of its kind in Canada and is intended to offset the impacts on the provincial fuel tax associated with EVs.
On April 20, 2021, the Government of Saskatchewan introduced Bill 34 to create a new annual road use charge of $150 for passenger EVs registered in the province. In a recent press release, the provincial government announced that the increasing number of EVs contribute to the wear and tear on provincial roads, and the EV owners are currently not contributing to the maintenance of the roads through the provincial fuel tax because EVs do not consume conventional fossil fuels.
The provincial government maintains and repairs the roads in Saskatchewan from the road use fuel tax levied through The Fuel Tax Act, 2020. During the fiscal year of 2019-2020, this provincial tax raised $454 million in revenue, which was used to repair and maintain the roads in Saskatchewan whose total costs amounted to approximately $616 million.
Bill 34 proposes some changes to The Fuel Tax Act, 2000. The bill will change the name of the current act to The Fuel Tax and Road Use Charge Act, and it will introduce a new road use charge for EVs registered in Saskatchewan. The bill also makes minor amendments to The Financial Administration Act, 1993 to include this new road use charge as a tax.
The provincial government plans to set the new annual road use charge at $150 for EVs registered in the province because it estimates that the average road use fuel tax for non-EV owners is around $150 each year, comparable to the proposed new charge.
Bill 34 has passed the third reading, and once it receives the Royal Assent, it will enter into force on October 1, 2021. For now, the new annual road use charge will apply only to passenger EVs registered in the province, but the provincial government is considering expanding the charge to commercial EVs and inter-jurisdictional trucking. There is also the potential for a charge to be levied on charging stations.
Although Saskatchewan reportedly has less than 500 EVs registered in the province, making the charge symbolic at this time, the charge does highlight the ongoing debate around whether EVs' contribution to sustainability is overstated with the issues around the energy sources charging EVs and the lifecycle and carbon footprint of EVs and their batteries. The introduction of the charge is at odds with the various incentive programs to promote the EV purchases being provided by the federal government, British Columbia, Quebec, Prince Edward Island and Nova Scotia such as rebates for new purchases and leases, waiver of registration fees, or discounts for electric charging. No other province has yet indicated that it will follow Saskatchewan's lead and introduce similar road use charges for EVs.
Bennett Jones has extensive experience in energy and climate change. If you have questions regarding the introduction of road use charge for EVs, please contact our Climate Change or ESG groups.