Prime Minister Mark Carney has announced a temporary suspension of the federal excise tax on gasoline, diesel, and aviation fuel following recent byelection victories that secured the government a majority in the House of Commons. The measure is designed to provide short term financial relief to Canadians as global fuel prices continue to rise amid ongoing geopolitical tensions affecting energy supply routes.
Under the plan, the federal excise tax on gasoline will be reduced by 10 cents per litre, while diesel and aviation fuel will see a reduction of 4 cents per litre. The tax suspension is scheduled to take effect Monday and remain in place until Labour Day. Federal officials estimate the temporary tax relief will cost approximately $2.4 billion.
Speaking in Ottawa, the prime minister said rising fuel costs linked to the conflict involving Iran have placed pressure on households and businesses across the country. He described the tax suspension as a responsible and targeted step intended to help Canadians manage short term affordability challenges while maintaining broader fiscal stability.
The federal government said the policy is expected to ease operating costs for key sectors that depend heavily on transportation fuel, including trucking, agriculture, construction, food distribution, and housing supply chains. Officials noted that lowering fuel costs could help limit price increases across essential goods and services that rely on logistics networks.
Fuel prices in Canada have climbed significantly in recent weeks following disruptions to global energy flows through the Strait of Hormuz, one of the world’s most important oil shipping corridors. Roughly one fifth of global oil shipments normally pass through the strait, but maritime activity has slowed sharply due to security threats linked to drones, mines, and regional military tensions.
Carney also pointed to updated projections from the International Monetary Fund indicating Canada is expected to remain one of the fastest growing economies in the G7 over the next two years. He said the temporary tax measure is intended to support affordability while preserving the country’s overall economic momentum during a period of global uncertainty affecting energy markets.
