A senior government official said the extension of the fuel excise tax suspension will be unveiled Wednesday. The source lacked clearance to discuss the matter openly. The plan would keep the tax holiday in place until early 2027.
When the tax was first paused in April, pump prices moved lower - roughly 10 Canadian cents per liter for gasoline and about 4 cents for diesel. The suspension applies to aviation fuel as well. Set to lapse on Sept. 7, the policy was projected to impose roughly C$2.4 billion in costs on the federal treasury by that point. Gasoline purchases also include a 5% goods and services tax.
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This move arrives as energy costs climb alongside the war in Iran. Crude prices are about 30% higher than before the conflict began earlier this year, a jump tied to disrupted shipping through the Strait of Hormuz, a vital route that previously carried roughly 20% of global oil and liquefied natural gas. For everyday budgets, a longer tax holiday could blunt some of that global pressure at the pump, even as broader energy dynamics keep prices bouncy.