Gas prices have been a sore point for many Canadians, but they’re about to become even more painful as the federal fuel excise tax is kicking back in soon.
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While the tax was initially suspended back in April 2026, global oil disruptions have continued since then, leading to costs further increasing in spite of the tax relief. That means prices at the pump could get even more expensive if the tax returns.
Canada’s Federal Fuel Excise Tax
The federal fuel excise tax is applied at a rate of 10 cents per litre on gasoline and unleaded aviation gasoline, as well as 4 cents per litre on diesel fuel and aviation fuel, other than aviation gasoline.
“The tax is typically payable by the manufacturer or wholesaler at delivery to a retailer and is embedded in the price of fuel, for example at the pump,” explains the Canadian government. “Provincial governments also collect their own gasoline and diesel taxes.”
Suspending the Tax
On April 20, 2026, the federal government announced it would be suspending the federal fuel excise tax until Labour Day, September 7, 2026 (inclusive). The measure was intended to “address fuel price pressures caused by global oil disruptions related to the Middle East conflict.”
The tax was then dropped to 0 cents per litre on all the aforementioned fuel types. It was estimated that the tax suspension would provide over $2.4 billion in total tax relief that would “ease the pressure of high fuel prices on Canadians in 2026.”
Jumping Prices at the Pump
With the tax expected to return on Labour Day, some Canadians are calling for the suspension to remain in place longer. Conservative Leader Pierre Poilievre wrote a letter to Prime Minister Carney on Sunday, calling for the tax pause to stay until Canada Day 2027.
When Conservatives first called on you to take all federal taxes off gas and diesel until the new year, Canadians were already struggling with the cost of living.
Since then, things have not gotten better. They have gotten worse.
Gas prices are rising again. Your Liberal taxes and regulations continue to force Canadian drivers, truckers and families to pay 17.1 cents more per litre than Americans. Meanwhile, the OECD confirmed that Canada continues to have the highest grocery price inflation in the G7, with food and energy driving inflation higher.
Yet rather than provide Canadians with more relief, you plan to bring back another 10 cents per litre in taxes on gas and four cents on diesel after Labour Day.
What do you think about the tax suspension?
