Finance Minister François-Philippe Champagne will announce that the federal government is extending fuel tax waivers until early 2027. This measure is designed to help Canadian households and companies manage the rising cost of living.
The 10-cent gas and 4-cent diesel relief extension
Finance Minister François-Philippe Champagne is expected to announce on Wednesday in Ottawa that the Liberal government will extend the federal excise tax holiday on gasoline and diesel until early 2027. According to sources that spoke with Radio-Canada ,this move ensures that the tax relief remains in place well beyond the previous deadline of September 7, which coincided with Labour Day.
The specific relief involves the removal of a 10-cent federal excise tax on every litre of gasoline and a four-cent tax on every litre of diesel. By extending these waivers, the Liberal government aims to provide a consistent financial buffer for motorists and transpport businesses facing volatile energy costs.
A $2.4 billion bridge against U.S.-Iran oil volatility
The original tax holiday was introduced in April by Prime Minister Mark Carney as a temporary measure to mitigate the impact of a global oil price spike. As reported by CBC News, this spike was triggered by the onset of a war between the United States and Iran, creating immediate economic pressure on Canadian consumers.
At the time of the initial rollout, Prime Minister Mark Carney estimated the cost of the tax holiday to be approximately $2.4 billion. The government framed this expenditure as a "bridge" to help Canadians navigate short-term global pressures, though the extension to 2027 suggests that the federal government now views these pressures as a long-term structural challenge rather than a fleeting crisis.
Ontario's 5.7-cent cut and the $115 household saving
The federal move mirrors previous efforts by provincial leadership to lower costs at the pump. In 2022, the Ford government in Ontario implemented its own temporary fuel tax holiday, which reduced taxes by 5.7 cents per litre of gasoline and 5.3 cents per litre of diesel.
This provincial intervention effectively lowered the combined tax rate for gas and diesel to nine cents per litre. According to the 2026 provincial budget, the Ford government claims this specific reduction saved Ontario households approximately $115 per year,demonstrating a provincial precedent for using tax holidays as a primary tool for inflation relief.
Pierre Poilievre's demand for a full GST removal by 2027
Despite the government's extesnion, Conservative Leader Pierre Poilievre has argued that the current measures do not go far enough. On Wednesday, Poilievre repeated his demand that the Liberal government remove all federal taxes on gasoline and diesel—including the Goods and Services Tax (GST)—until at least Canada Day 2027.
While the federal government has addressed the excise tax, it remains unclear if the Liberal administration will consider the more aggressive GST cuts proposed by the Conservatives. The source reporting focuses on the excise tax extension but does not indicate whether Finance Minister François-Philippe Champagne intends to addrress the broader tax removal requested by the opposition.
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