Ottawa is extending its fuel excise tax holiday until Jan. 31, 2027, before gradually reinstating the levy over the following two months, as the government looks to ease costs for Canadians amid continued volatility in global energy markets.
“This is real relief right now, relief for families that are commuting to work,” Finance Minister Francois-Philippe Champagne said Wednesday at a press conference.
In April, Prime Minister Mark Carney temporarily removed the 10-cent-per-litre federal excise tax on gasoline and four-cent-per-litre levy on diesel until after Labour Day as the war in Iran sent global energy prices soaring.
READ MORE: Canada temporarily suspends federal fuel tax amid conflicts in the Middle East
The extension will now cost Ottawa an estimated $5.3 billion in foregone revenue.
While Champagne acknowledged that gas prices have continued to rise despite the tax holiday, he said suspending the excise tax remains one of the most direct ways the federal government can provide relief.
The tax will begin returning at half its regular rate on Feb. 1 before being fully reinstated on April 1, 2027, though the minister left open the possibility that changing global conditions could affect that timeline.
“We’ll see the state of the world and thereafter,” he said.
This also comes as Canada’s retaliatory tariffs against the U.S. comes into effect next week, affecting around $27.8 billion worth of American goods.
Asked how Ottawa would absorb the $5.3 billion cost while also providing billions in support to industries and workers affected by the trade war with the United States, Champagne pointed to spending restraint and higher government revenues associated with elevated oil prices.
“We have the fiscal capacity to support you. We’re entering this period in the position of strength,” Champagne said. “Canada is going fine.”
Conservative Party Leader Pierre Poilievre has called on the government to extend the temporary relief until next year’s Canada Day, citing that Canadians need “real relief.”
“Any relief for working people is good news, but a modest extension of the Liberals’ current plan will not be enough for Canadians already squeezed by higher costs,” Poilievre said in a statement.
The Conservatives are calling on Ottawa to remove all federal taxes on gasoline and diesel, which the party says would save Canadians up to 25 cents per litre. That would include eliminating costs associated with the Clean Fuel Regulations and the GST, as well as permanently scrapping the industrial carbon price, the statement read.
On the other hand, NDP Leader Avi Lewis is calling for a windfall tax on oil and gas companies, pointing out that gas prices are still high even after a “$2.4 billion giveaway.”
“Instead of more corporate welfare, it’s time for a windfall tax on the big oil giants that are set to make $100 billion in profits this year because of Trump’s illegal war in Iran,” Lewis said in a statement.
“Doing so will generate billions in new revenue that we can use to give Canadians real relief at gas stations and grocery checkouts.”
