Gas and diesel prices set to drop
Drivers across Canada will see a temporary drop in fuel prices starting next week, as the federal government moves to suspend its excise tax on gasoline and diesel amid rising global oil costs.
Prime Minister Mark Carney announced in Ottawa that the measure will take effect on April 20 and remain in place until September 7. The federal government estimates the suspension will lower gasoline prices by about 10 cents per litre and diesel by four cents per litre.
The decision comes as fuel costs have climbed sharply in recent weeks, driven in part by supply disruptions linked to tensions between the United States and Iran. Shipments through the Strait of Hormuz—a critical corridor for global energy—have slowed since late February, contributing to price increases of more than 40 cents per litre in some regions of Canada.
Business groups say the temporary suspension could ease some cost pressures. Canadian Federation of Independent Business president Dan Kelly said many small businesses have been absorbing higher fuel costs in recent months, while others have passed those increases on to customers.
“It is good to see both government and the official opposition supporting action on this critical issue.
Business owners have been feeling significant energy cost pressures and uncertainty over the past two months. Nearly two-thirds of small businesses report they are currently absorbing additional fuel costs, while about a third have increased their prices as a result,” Kelly said.
“The next step for the federal government should be to permanently eliminate the tax-on-tax treatment of charging the GST on gasoline and diesel fuel taxes. Provincial governments should also follow suit and pause their fuel excise and sales taxes.”
Carney said the policy is intended as a short-term response to those pressures, framing it as a limited intervention rather than a structural change.
“To be clear, today’s cut to the fuel excise tax is a responsible, temporary measure consistent with what it takes to build a stronger economy, a more affordable economy, combined with sound fiscal management. When Canadians are facing financial pressures, they carefully manage their expenses, and they expect their government to do the same,” Carney said.
The federal excise tax has remained unchanged for decades, set at 10 cents per litre for gasoline since 1995 and four cents per litre for diesel since 1987.
