Drivers should see some relief at the pumps today as the federal government’s temporary suspension of the fuel excise tax on gasoline and diesel takes effect across Canada.
The measure, announced last week by Prime Minister Mark Carney, removes the full federal excise tax on gasoline and diesel until Sept. 7. Ottawa says the change should lower the price of regular gasoline by about 10 cents a litre and diesel by about four cents a litre. The suspension also applies to aviation fuel.
The government says the tax break is meant to provide short-term relief as global conflict and supply disruptions in the Middle East continue to push fuel prices higher.
In a statement issued when the measure was announced, the government said rising energy costs abroad are adding pressure for Canadian households and businesses, and argued the temporary tax suspension would help reduce costs while broader economic and energy plans move forward.
Carney said the government is focused on measures it can control as it works to build what he described as a stronger and more resilient economy.
Finance Minister François-Philippe Champagne said the move is intended to offer timely and tangible relief for Canadians facing affordability pressures, while also helping sectors sensitive to fuel costs.
Ottawa said the tax cut should also reduce operating expenses for truckers and businesses in the food, agriculture, housing, construction and delivery sectors. The government said lower fuel costs could improve financial flexibility for companies, allowing them to hire, build and export more.
The fuel tax suspension is one of several affordability measures the federal government has highlighted in recent months.
Ottawa says those steps include a reduction in the first marginal personal income tax rate, the removal of GST on some new homes for first-time buyers, and the cancellation of the federal consumer carbon tax effective April 1, 2025. The government says ending the consumer carbon tax helped lower gas prices in most provinces and territories by up to 18 cents a litre compared with 2024-25 levels.
The government has also pointed to the new Canada Groceries and Essentials Benefit and other measures in Budget 2025 aimed at lowering household costs and improving affordability.
The temporary excise tax suspension is set to remain in place through Labour Day, with the government framing it as immediate relief while it pursues longer-term plans tied to electricity, LNG and nuclear development, along with conventional energy projects.
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