Prime Minister Mark Carney has announced a temporary suspension of the federal fuel excise tax on gasoline, diesel and aviation fuel, aiming to provide relief to Canadians facing rising costs.
The measure will remove 10 cents per litre on gasoline and four cents per litre on diesel and aviation fuel, effective Monday through Labour Day. The tax holiday is expected to cost the federal government approximately $2.4 billion.
Carney said the move is designed to help Canadians navigate short-term economic pressures driven by global instability, particularly the ongoing conflict involving Iran, which has disrupted oil supplies and driven up fuel prices worldwide.
The government noted the policy will also lower operating costs for key sectors including transportation, agriculture, construction and food supply chains.
Fuel prices in Canada have surged to over 176 cents per litre on average, compared to roughly 126 cents before the escalation of conflict in the Middle East. The disruption of shipping through the Strait of Hormuz — a critical global oil route — has significantly constrained supply, despite efforts to restore traffic through a U.S.-led naval blockade.
Carney emphasized that the tax cut is a temporary and targeted measure, balancing affordability concerns with broader fiscal responsibility as global energy markets remain volatile.
