Canadians paid $3 billion extra for motor vehicle fuel between April and June despite the suspension
The federal fuel excise tax will stay suspended until January 31, 2027, at an additional cost of $2.9bn in forgone revenue.
Finance Canada, in a September 2 release, put total estimated fuel tax relief for 2026-27 at $5.3bn.
Half the regular rate returns on February 1, 2027, according to the same release, which sets the interim rates at 5 cents per litre for gasoline and unleaded aviation gasoline, 5.5 cents for leaded aviation gasoline, and 2 cents for diesel and aviation fuel.
Full rates of 10 cents, 11 cents, and 4 cents resume on April 1, 2027.
"With many families still feeling the pressure of higher costs, we're extending the federal fuel tax suspension to keep more money in Canadians' pockets," Finance and National Revenue Minister François-Philippe Champagne said in the release.
Energy and Natural Resources Minister Tim Hodgson, quoted in the same document, said Canadians "should not have to pay for what they did not cause – whether it is disruption in the Middle East or an unjustified trade war."
Champagne told reporters in Ottawa that oil market volatility is expected to continue "for the foreseeable future," The Canadian Press reported.
He described the extension as "practical relief at a time when Canadians need it most."
The Canadian Automobile Association put the national average price of regular gasoline at $1.729 per litre on September 2, as reported by The Canadian Press, which calculated that reinstating the tax would push that to $1.829, or roughly $5 more to fill a 50-litre tank.
Statistics Canada recorded a national average of about $1.79 in April.
Fuel prices have run ahead of the tax relief since the suspension took effect on April 20, 2026, per Finance Canada.
Economist Jim Stanford, writing for the Centre for Future Work on September 2, found gasoline and diesel prices are higher now than before the holiday began, and that consumers paid an extra $3bn for motor vehicle fuels between April and June.
Stanford's briefing paper, Another Band-aid: Extending Gas Tax Holiday Won't Fix Fossil Fuel Inflation, identifies a widening crack spread between refined product and crude prices, and early spillover from petroleum into air travel, transportation, and food.
That spillover raises the risk of future interest rate increases, the paper says.
Combined after-tax profit across upstream and downstream petroleum reached $23bn in the second quarter, more than double the first, with five percent of the additional profits and two percent of additional revenues reinvested in capital spending.
Headline inflation stood at 2.8 percent, near the top of the Bank of Canada's one to three percent target range.
KPMG Economics chief economist Ali Jaffery told the outlet before the decision that "it's sensible to let this ride out and not renew it," arguing "the worst is behind us" on energy prices.
Conservative Leader Pierre Poilievre said his party "won another battle for Canadian families" in a statement carried by The Canadian Press, while calling the announcement "another Liberal half measure."
A September 1 letter from Pierre Poilievre and Conservative shadow minister for national revenue Jasraj Hallan asked Prime Minister Mark Carney to remove the GST from gasoline and diesel and to scrap the Clean Fuel Regulation and the industrial carbon tax.
Prime Minister, Canadians can’t afford your Labour Day gas tax hike.
— Pierre Poilievre (@PierrePoilievre) September 1, 2026
Families can’t afford gas and groceries. Small businesses are closing because of rising fuel costs.
Listen to Conservatives. Listen to Canadians. Cancel the tax hike and end all taxes on gas to save families… pic.twitter.com/77Ttz1F2PR
The package would save up to 25 cents per litre and as much as $1,200 a year per family, according to the letter.
NDP Leader Avi Lewis called for a windfall tax instead, saying in a media release quoted by The Canadian Press that oil giants are "set to make $100 billion in profits this year."
Canadian Taxpayers Federation federal director Franco Terrazzano welcomed the extension in a statement from the group, adding that "Carney needs to cut spending to make this tax cut permanent without ballooning the debt."
Ontario Premier Doug Ford welcomed the pause on social media and called for it to be made "permanent," The Canadian Press reported.
