The Carney government is temporarily pausing the federal fuel tax until Labour Day, which the prime minister says could save drivers up to 10 cents at the pump.
In Ottawa on Tuesday (April 14), Prime Minister Mark Carney announced several “new measures to bring down costs for Canadians,” which included suspending the federal fuel excise tax on gasoline and diesel.
The suspension is temporary, but Carney’s office says it’s expected to reduce Canadians’ bills at the pumps by 10 cents per litre on regular gasoline and four cents on diesel. The tax will be suspended from April 20 to Sept. 4.
The federal government is also temporarily suspending the tax on aviation fuels.
A news release from the Prime Minister’s Office says cutting the tax on gasoline and diesel until Labour Day is “a responsible measure that will reduce operating costs for truckers and businesses in the food, agriculture, housing, construction and delivery sectors.”
He said the pause is for a “finite period,” but also when Canadians are travelling more.
Carney said there is an “enormous shock” in the global economy currently with the war in Iran. He added that fiscal decisions, like this pause on the tax, need to be balanced.
“This is targeted within the overall gamut of things we can do around fuel charges.”
The prime minister said the cost of the suspension will be about $2.4 billion.
“We didn’t just say ‘Get rid of all the taxes on gasoline and let’s spend $9 billion’ as if we’re not in government, which is what you do say when you’re not in government. But when you’re in government, you have to choose, you have to balance, and this is the balance we struck.”
He noted that the provinces also have excise taxes on fuel, but it’s up to the provinces on whether or not they want to do something targeted.
B.C. has some of the highest in the country, with three taxes: 27 cents per litre in the Vancouver area, 20 cents in the Victoria area and 14.5 cents for the rest of B.C.
Alberta’s tax is 13 cents per litre, while the Northwest Territories is 10.7 cents, Nunavut is 6.4 cents, and Yukon is the lowest country-wide at 6.2 cents.
B.C.’s Jobs and Economic Growth Minister Ravi Kahlon told media Tuesday that the pause is a “good interim step, but the challenge we have in front of us is much greater.”
Kahlon said an escalation in tension is expected in the Middle East, given recent remarks from U.S. President Donald Trump and social media posts from Iran.
“We’re likely to see the prices actually go up in the near term, so even the small amount of measures that the federal government has introduced will probably get swallowed up by increased costs.”