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Conservative Leader Pierre Poilievre is once again pressing Prime Minister Mark Carney to prolong the halt on Canada’s fuel excise tax, which is scheduled to be reinstated on Labour Day. The federal government temporarily suspended this tax on retail gasoline sales in April, a measure that will lapse on September 7. In a letter addressed to Carney on Sunday, Poilievre argued for the tax to remain suspended until at least Canada Day 2027, citing rising living costs as a major concern for Canadians.
Rising Costs Prompt Urgent Call for Tax Extension
“When Conservatives first urged you to eliminate all federal taxes on gas and diesel until the new year, Canadians were already facing significant financial pressure,” Poilievre wrote. “Since then, the situation has deteriorated further.” With gas prices on the rise and food inflation continuing to be a pressing issue, the Conservative leader referenced a recent Organisation for Economic Co-operation and Development (OECD) report that indicated Canada has experienced the highest food price increases among G7 nations.
Worldwide oil prices remain high, largely influenced by ongoing tensions in the region surrounding Iran, which have led to supply disruptions. The Strait of Hormuz, a critical passageway for approximately 20% of the world’s crude oil, remains mostly closed to cargo traffic due to fears of attacks. This instability has exacerbated the situation, causing significant damage to regional oil and gas infrastructure.
Current Fuel Prices and Economic Implications
As of now, the price of West Texas Intermediate crude oil is hovering around US$82 per barrel, a slight decline from a recent peak of US$83 but up from US$75 just a week ago. The Canadian Automobile Association reports that the national average cost for regular gasoline has increased to approximately CAD$1.67 per litre, up from CAD$1.64 the previous week and notably higher than CAD$1.33 at the same time last year.
The temporary suspension of the excise tax has allowed drivers to save approximately 10 cents per litre on gasoline and around four cents on diesel. Poilievre has been vocal about the implications of reinstating the tax, asserting that “a tax hike on fuel is a tax hike on everything.” He has called for the complete removal of all taxes on fuel, arguing that this would further alleviate financial burdens on Canadians.
Political Support for the Tax Suspension
Poilievre’s push for an extended pause on the fuel excise tax is not an isolated plea; Ontario Premier Doug Ford also recently urged Prime Minister Carney to consider maintaining the suspension until at least January 1 or even making it permanent. The pressures on consumers stem from a complex interplay of global supply and demand dynamics, as well as various taxes that businesses may pass on to customers.
It is important to note that the federal excise tax on gasoline operates independently from other taxes, such as the Harmonized Sales Tax (HST), which remains applicable. Depending on the region, the return of the excise tax could lead to an increase of approximately 10 to 11 cents per litre, as indicated by Dan McTeague, president of Canadians for Affordable Energy.
Why it Matters
The potential reinstatement of the fuel excise tax comes at a time when many Canadians are already grappling with the rising cost of living. With inflation affecting not just fuel prices but also essential goods like groceries and construction materials, the call for an extended suspension of the tax is likely to resonate with a public seeking relief from escalating expenses. As the political landscape heats up, the decisions made in the coming weeks could significantly impact Canadian households, shaping the economic discourse leading into future elections.