Finance Minister François-Philippe Champagne revealed on Wednesday that the federal excise tax holiday on gasoline and diesel will be extended until January 31, 2027. Following this extension, from February 1 to March 31, 2027, the excise tax will be reinstated at 50% of its pre-tax holiday rate, eventually returning to the full rate on April 1, 2027. This tax relief also encompasses the four-cent per liter 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 highlighted that the ongoing disruptions in the Middle East have led to increased energy costs, fuel price hikes, and additional financial strain on domestic households, workers, and enterprises.
In April, Carney initiated the temporary removal of the federal excise tax on gas, diesel, and aviation fuel until September 7, Labor Day, to alleviate short-term pressures stemming from a surge in global oil prices due to the U.S.-Iran conflict. Extending the tax holiday is projected to incur an additional $2.9 billion, resulting in a total fuel tax relief of $5.3 billion since April.
Moreover, the Ford government introduced its own temporary fuel tax holiday in 2022, reducing taxes on gas and diesel by 5.7 cents and 5.3 cents per liter, respectively. This adjustment aligned the provincial tax rates on gas and diesel to nine cents per liter, as outlined in the 2026 provincial budget, saving households approximately $115 annually. The previous year saw the permanence of this tax reduction.
Ontario Premier Doug Ford expressed approval of the extension, advocating for its permanence. When asked about Ford’s request for a permanent tax holiday, Champagne remained noncommittal, citing the need to assess the global situation in January before making a decision.
The federal excise taxes on fuel are incorporated by producers and importers into fuel prices, ultimately impacting consumers at the pump. Champagne stressed that the excise tax holiday directly benefits consumers by reducing costs where it matters most, leading to lower fuel expenses nationwide. The measure is deemed highly impactful and targeted, offering tangible relief to Canadians.
While the extension of the excise tax holiday has garnered support, NDP Leader Avi Lewis criticized it as corporate welfare favoring oil companies profiting from elevated oil prices due to geopolitical conflicts. Lewis suggested imposing a windfall tax on oil corporations to counteract rising gas prices and boost government revenue.
