Conservative Leader Pierre Poilievre is intensifying his campaign for Prime Minister Mark Carney to continue the suspension of Canada’s fuel excise tax, which is set to be reinstated on Labour Day. The tax, temporarily lifted in April, is scheduled to return on September 7. In a letter addressed to Carney on Sunday, Poilievre urged that the suspension be extended at least until Canada Day 2027, citing ongoing financial struggles faced by Canadians.
Rising Costs Prompt Urgency
“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,” Poilievre stated. “Since then, things have not gotten better; they have gotten worse.” He pointed out that gas prices are climbing again, while food price inflation remains severe, with a recent report from the Organisation for Economic Co-operation and Development revealing that Canada recorded the steepest increases in food prices among G7 nations.
The backdrop to this call for an extension is the ongoing turmoil in global oil markets, driven largely by the Iran conflict, which has led to significant supply disruptions. The Strait of Hormuz, a critical maritime corridor for about 20% of the world’s oil, remains largely inaccessible due to security concerns. This geopolitical instability has further exacerbated oil prices, which have recently fluctuated, with West Texas Intermediate crude hovering around US$82 per barrel.
The Current Fuel Landscape
According to the Canadian Automobile Association, the average price for regular gasoline across Canada stands at approximately CAD$1.67 per litre. This marks an increase from CAD$1.64 just a week prior and is notably higher than the CAD$1.33 recorded at the same time last year. The temporary suspension of the fuel excise tax has afforded drivers about 10 cents per litre in savings for gasoline and 4 cents per litre for diesel.
Poilievre has consistently called for a comprehensive reduction of fuel taxes. “A tax hike on fuel is a tax hike on everything,” he emphasised, suggesting that the reinstatement of the excise tax would lead to higher prices not just at the pump but across a range of goods and services, including groceries and construction materials.
Political Pressure Mounts
The Conservative leader is not alone in his demands; Ontario Premier Doug Ford has also voiced his support for extending the fuel excise tax suspension. Ford has requested that Carney consider prolonging the suspension until at least January 1, or even making it a permanent measure.
The pricing of gasoline and diesel at retail is influenced by various factors, including global supply and demand dynamics, as well as taxes that businesses may pass on to consumers. The federal excise tax is distinct from other taxes like the Harmonised Sales Tax (HST), which remains applicable even if the excise tax is suspended. Industry experts, such as Dan McTeague, president of Canadians for Affordable Energy, estimate that reinstating the excise tax could lead to an increase of approximately 10 to 11 cents per litre across different regions.
Why it Matters
The debate over extending the fuel excise tax pause is emblematic of broader economic pressures facing Canadian households. With the cost of living rising due to inflation and geopolitical instability, the outcome of this discussion could have profound implications for affordability and consumer behaviour. As Canadians grapple with escalating prices, the government’s response may shape both public sentiment and the political landscape in the lead-up to future elections.
