Canada Suspends Fuel Tax to Cut Gas Prices by 10 Cents per Liter

Based on coverage from Reuters, Bloomberg, Global News, The Toronto Star, The Toronto Star, CP24, Toronto Sun, and CBC.

Prime Minister Mark Carney says Ottawa will temporarily suspend the federal fuel excise tax on gasoline and diesel starting April 20, with the break running until Sept. 7, the Labour Day weekend. The goal is quick relief as fuel prices jump in Canada and abroad amid the Iran war and disruptions around the Strait of Hormuz.

The decision to suspend the federal fuel excise tax comes after calls from various political leaders, including the Conservative Party, for immediate relief from rising fuel costs, as discussed in previous coverage on the fuel tax suspension. This temporary measure aims to alleviate financial pressure on Canadians during a challenging economic period.

Carney framed the move as a “responsible, temporary measure” aimed at helping both households and businesses deal with higher day-to-day costs.

Federal gas tax holiday dates and details

The suspension covers the federal excise tax on regular gasoline and diesel. Carney said it should cut the price of regular gas by about 10 cents per litre and diesel by about 4 cents per litre, matching the current federal excise tax rates.

Multiple reports also say Ottawa will remove the federal excise tax on aviation fuels during the same period, which the government argues will help lower operating costs across the economy, especially where shipping and air travel feed into prices.

This is a suspension of the excise tax specifically. Several sources point out Canadians will still see other charges on fuel, including the 5% GST, unless further measures are added later.

Why Ottawa says prices are spiking

Carney and several outlets link the policy directly to higher global oil prices tied to the Iran war. Reports describe major shipping disruption through the Strait of Hormuz, a key route for global energy shipments. One account says tanker traffic has been heavily restricted, while another describes the route as largely at a standstill since the conflict began in late February.

The result at home: one report says the national average for gas is just over 176 cents per litre, up from about 126 cents per litre before the conflict escalated. Another report says prices have surged by more than 40 cents per litre in some regions.

There’s also a difference in how steep the increase is described. Bloomberg’s account says gas prices have shot up about 45% in 2026, while other reporting focuses on the jump since late February.

How much Canadians could save

Carney says the excise tax break amounts to up to 10 cents per litre on gasoline and 4 cents per litre on diesel. He also argues that, combined with the government’s earlier elimination of the consumer carbon tax, the overall reduction could total up to 28 cents per litre at the pump.

The government is pitching the move as help for households and as a cost reducer for sectors that move goods: trucking, food, agriculture, housing, construction, and delivery.

Political timing after Liberal majority win

The announcement lands right after the Liberals swept three byelections, giving Carney a majority in the House of Commons for the first time since he took office about a year ago. With a majority, the government can pass measures like this without needing opposition support.

It’s also the second tax-focused affordability move mentioned in the coverage this year. Bloomberg notes the government boosted the GST credit for five years and added a one-time top-up in June, describing it as grocery-bill relief.

Polling is part of the backdrop too: Bloomberg cites a Nanos Research poll that found cutting fuel taxes was Canadians’ top preference for responding to the fuel-price spike.

Cost to federal finances and opposition response

An official in Finance Minister François-Philippe Champagne’s office told one outlet the excise tax suspension will cost about $2.4 billion over roughly five months. Bloomberg also notes Ottawa is already projecting a C$65.4 billion deficit this fiscal year, adding to questions about how much room the government has for more short-term relief.

Conservative Leader Pierre Poilievre has been pushing for a broader pause: eliminating the excise tax, the GST on fuel, and federal clean fuel regulations until the end of the year. One report says Poilievre claims that package would cut prices by 25 cents per litre and save a family of four around $1,200 through the rest of the year, with an estimated federal cost of $5.25 billion. The same report says Conservatives argue they’d offset it by cutting spending elsewhere, including the gun buyback program and cancelling a high-speed rail project between Toronto and Quebec City.

On the left, NDP leader Avi Lewis is also targeting affordability, arguing corporations are taking in excessive profits and accusing the government of failing to stop Canadians from being overcharged.

The fuel tax suspension is set to kick in April 20, and Canadians should see the impact where fuel retailers pass along the full excise tax savings.

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