Finance Minister François-Philippe Champagne revealed on Wednesday that the Liberal government plans to extend the federal excise tax holiday on gasoline and diesel until January 31, 2027. Following this extension, from February 1 to March 31, 2027, the excise tax will be reinstated at 50% of the pre-holiday value before returning to the full rate on April 1, 2027. The aviation fuel excise tax of four cents per liter is also included in this fuel tax holiday.
Champagne made this announcement in Ottawa, highlighting the government’s commitment to assisting Canadian families and businesses in coping with the escalating cost of living. He attributed the surge in energy costs and fuel prices to ongoing disruptions in the Middle East, which have intensified financial pressures on households, employees, and enterprises domestically.
Earlier in April, Carney had temporarily lifted the federal excise tax on gasoline by 10 cents per liter, four cents per liter on diesel, and four cents per liter on aviation fuel until September 7. This move, estimated to cost around $2.4 billion, aimed to alleviate the immediate financial burdens resulting from the spike in global oil prices triggered by the U.S.-Iran conflict.
The extension of the tax holiday is projected to add another $2.9 billion, totaling the fuel tax relief since April to $5.3 billion. In 2022, the Ford administration implemented its temporary fuel tax holiday, reducing taxes on gasoline by 5.7 cents per liter and on diesel by 5.3 cents per liter. This adjustment harmonized the provincial tax rates on gasoline and diesel to nine cents per liter, leading to annual savings of approximately $115 per household, as outlined in the 2026 provincial budget.
Ontario Premier Doug Ford expressed support for the extension, advocating for permanency. When questioned about Ford’s request for making the tax holiday permanent, Champagne remained noncommittal, citing the need to assess the global situation in January before making a decision.
The federal Conservatives have consistently urged the government to prolong the excise tax holiday since Carney’s initial announcement. Conservative Leader Pierre Poilievre welcomed the extension but emphasized the necessity for further relief measures, proposing the elimination of all federal taxes on gasoline and diesel until at least Canada Day 2027.
Champagne emphasized that excise tax relief directly benefits consumers by reducing fuel costs nationwide. NDP Leader Avi Lewis criticized the measure as corporate welfare favoring oil companies profiting from the Iran conflict-induced spike in oil prices. Lewis suggested imposing a windfall tax on these companies instead.
The ongoing debate surrounding the extension and nature of the fuel excise tax holiday reflects differing perspectives on addressing the economic challenges posed by escalating fuel costs and global geopolitical tensions.