Finance Minister François-Philippe Champagne revealed on Wednesday that the federal excise tax holiday on gasoline and diesel is being prolonged until January 31, 2027, by the Liberal government. The excise tax will be reintroduced at 50% of its pre-tax holiday value from February 1 to March 31, 2027, before returning to the full rate on April 1, 2027. This extension also encompasses the four-cent per litre excise tax on aviation fuel.
Champagne made the announcement in Ottawa, emphasizing the government’s commitment to assisting Canadian families and businesses in coping with the escalating cost of living. He attributed the price hikes in fuel to ongoing disruptions in the Middle East, leading to increased energy costs and creating additional financial strain for families, workers, and businesses in Canada.
The initial tax suspension, introduced by Carney in April, eliminated the 10-cent federal excise tax on gasoline, four cents per litre on diesel, and four cents on aviation fuel until Labor Day on September 7. The estimated cost of this initiative was $2.4 billion, aimed at alleviating short-term pressures due to the surge in global oil prices following the U.S.-Iran conflict.
The extension of the tax holiday is expected to incur an additional cost of $2.9 billion, bringing the total relief on fuels since April to $5.3 billion according to Finance Canada estimates. This move aligns with efforts to mitigate the impact of rising fuel prices on Canadians.
Ontario Premier Doug Ford welcomed the news of the extension and advocated for making it a permanent arrangement. However, Finance Minister Champagne remained noncommittal regarding Ford’s request, stating that a decision would be made based on the prevailing circumstances in January.
Conservative Leader Pierre Poilievre commended the extension but emphasized the need for more comprehensive relief measures, proposing the removal of all federal taxes on gasoline and diesel until at least Canada Day 2027. NDP Leader Avi Lewis criticized the tax holiday as corporate welfare benefiting oil giants, suggesting a windfall tax on companies profiting from increased oil prices.
Overall, reducing the federal fuel excise tax is seen as a direct and impactful measure to alleviate financial burdens on Canadians, particularly in the face of escalating fuel costs nationwide. The government’s decision to extend the tax holiday reflects ongoing efforts to address affordability challenges faced by individuals and businesses in Canada.