Prime Minister Mark Carney announced on Tuesday that the federal fuel excise tax will be suspended until Labor Day weekend, a temporary step intended to blunt a recent surge in pump prices.
According to the announcement, the suspension will lower gasoline prices by 10 Canadian cents per liter and reduce diesel by 4 Canadian cents per liter. The government cited a roughly 45% increase in gasoline prices in 2026 as the factor motivating the move, attributing the jump primarily to the Iran war.
Carney described the measure as a "responsible, temporary measure" and linked it to broader efforts taken by his administration to ease household pressures. He noted that he had eliminated Canada’s consumer carbon tax last year, and reiterated the rationale behind targeted tax relief.
In prepared remarks, Carney said: "When Canadians are facing financial pressures, they carefully manage their expenses. They expect their government to do the same." The comment framed the excise suspension as part of fiscal decision-making intended to mirror the cost-conscious behavior of households.
This is the second time this year that Carney’s government has used tax policy to address cost-of-living concerns. In January, the government increased the goods and services tax credit for a five-year period and provided a one-time top-up in June, measures presented as steps to help with grocery bills.
The announcement also comes amid ongoing political pressure. Conservative Leader Pierre Poilievre has called for the removal of all federal taxes on gasoline until the end of the year, a demand that goes beyond the targeted excise suspension the government enacted.
For consumers, the excise suspension will apply on top of existing tax arrangements: Canadian gasoline also carries an additional 5% goods and services tax in addition to the excise tax that is being paused.
The suspension is explicitly temporary and set to expire at Labor Day weekend. Beyond that timeframe the announcement does not specify further actions or extensions.