Conservative Leader Pierre Poilievre is once again calling on Prime Minister Mark Carney to maintain the suspension of Canada’s fuel excise tax, which is scheduled to resume on Labour Day. The federal government temporarily removed the tax from retail gasoline sales in April, but this suspension is set to expire on September 7. In a letter addressed to Carney on Sunday, Poilievre argued that the tax should remain on hold until at least Canada Day 2027, highlighting the ongoing struggles of Canadians facing rising living costs.
Rising Costs and Economic Pressures
“When Conservatives first urged you to eliminate all federal taxes on gas and diesel until the new year, Canadians were already grappling with the cost of living crisis,” Poilievre stated. “Since then, the situation has not improved; it has worsened.” He pointed to the recent uptick in fuel prices and persistent grocery inflation, citing a report from the Organisation for Economic Co-operation and Development (OECD), which revealed that Canada is experiencing the highest food price increases among G7 nations.
Compounding these domestic concerns are elevated global oil prices, largely a result of ongoing tensions in the Middle East, particularly the Iran conflict, which has caused significant disruptions to supply chains. The Strait of Hormuz, through which approximately 20% of the world’s crude oil flows, remains largely closed to cargo traffic due to security fears. As a result, the price of West Texas Intermediate crude oil was approximately US$82 per barrel, reflecting a slight decrease from a recent high of US$83.
Current Fuel Prices in Canada
According to the Canadian Automobile Association, the national average price for regular gasoline in Canada is currently around CAD$1.67 per litre, a rise from CAD$1.64 just a week ago and a substantial increase from CAD$1.33 a year prior. The Canadian government suspended the fuel excise tax primarily in response to the geopolitical instability stemming from the U.S.-Iran conflict. This pause has allowed drivers to save approximately 10 cents per litre on gasoline and four cents per litre on diesel.
“A tax hike on fuel is essentially a tax hike on everything,” Poilievre asserted, emphasising the cascading effect that rising fuel costs have on the overall economy.
Political Pressure for Tax Suspension
This is not the first time Poilievre has pushed for an extension of the tax freeze; he previously urged Carney on August 6 to “cancel the hike”. In addition to Poilievre, Ontario Premier Doug Ford has also expressed support for extending the suspension, advocating for it to last at least until January 1, or even become a permanent measure.
The prices consumers encounter at the pump are influenced by various factors, including global crude oil supply and demand dynamics, alongside taxes and additional charges that businesses may pass on to consumers. The federal excise tax on gasoline operates separately from other taxes like the Harmonized Sales Tax (HST), which remains unaffected.
Experts estimate that reinstating the excise tax could lead to an increase of approximately 10 to 11 cents per litre, as outlined by Dan McTeague, president of Canadians for Affordable Energy.
Government’s Response and Future Outlook
When questioned about the potential for extending the pause on the excise tax, a spokesperson for Finance Minister François-Philippe Champagne pointed to the upcoming 2025 budget and the spring economic update as part of the government’s strategy to address rising living costs. However, they did not confirm whether further measures regarding the excise tax are under consideration.
“The government will continue to work with provinces to implement strategies that bolster our growth and competitiveness while addressing the pressing economic challenges that Canada, and the global community, are currently facing,” the spokesperson noted.
Why it Matters
The call to extend the fuel tax pause underscores a growing concern among political leaders regarding the economic pressures faced by Canadians. With inflation rates soaring and essential goods becoming increasingly unaffordable, the government’s response to Poilievre’s plea could significantly impact the financial well-being of millions. As the situation evolves, the decisions made in Ottawa will be closely scrutinised, given their potential to either alleviate or exacerbate the ongoing cost of living crisis.
