After securing a majority in the House of Commons with wins in three byelections, Prime Minister Mark Carney has announced the temporary suspension of the federal excise tax on gas and diesel. This move will result in a decrease of 10 cents per liter for gasoline and four cents per liter for diesel starting on Monday and lasting until Labour Day. Additionally, the excise tax on aviation fuel will also be removed during this period, with the overall cost estimated at $2.4 billion.
Carney stated that the recent surge in fuel prices globally, attributed to the conflict with Iran, has necessitated this action to alleviate short-term financial burdens on Canadians. Describing the tax cut as a responsible and temporary measure aimed at bolstering the economy, Carney emphasized the importance of combining affordability with sound fiscal management.
The government highlighted that this initiative will lower operating expenses for various sectors, including trucking, food, agriculture, housing, construction, and delivery. The average national gas price currently stands at over $1.76 per liter, a significant increase from pre-conflict levels due to disruptions in oil flow caused by geopolitical tensions.
Amid concerns over economic stability, Carney expressed optimism about Canada avoiding a recession and cited the IMF’s projection that Canada will be the second-strongest economy in the G7 this year and next. This outlook underscores the need for strengthening the economy domestically through initiatives like affordable housing and expedited approval of major infrastructure projects.
While the Opposition has called for deeper cuts by removing all federal fuel taxes until the year’s end, Conservative Leader Pierre Poilievre criticized the temporary nature of Carney’s tax break, advocating for a more extensive and prolonged tax relief. The Conservatives also seek the permanent elimination of the industrial price on carbon and clean fuel regulations, which they argue contribute to the increased cost of fuel.
In response to evolving global economic challenges, Carney affirmed the government’s commitment to addressing affordability issues and enhancing economic independence to navigate through the ongoing turmoil effectively.