Prime Minister Mark Carney speaks during a press conference on the sidelines of the 47th Association of Southeast Asian Nations (ASEAN) Summit in Kuala Lumpur on October 27, 2025. (Photo by Arif Kartono / AFP)
Prime Minister Mark Carney has announced his government will temporarily suspend the federal fuel excise tax on gas and diesel starting next week until Labour Day, amid a sharp increase in fuel prices due to the war in the Middle East.
The tax cut will begin on April 20 and is expected to save Canadians up to 10 cents per litre on gasoline and four cents per litre on diesel fuel, Carney said at an April 14 press conference, adding the excise tax on aviation fuels will also be removed.
“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,” he said.
The Prime Minister’s Office said in a press release the measure aims to reduce operating costs for truckers and businesses in the food, agriculture, housing, construction, and delivery sectors.
The measure is expected to cost the government approximately $2.4 billion, which Carney described as a “big decision in terms of fiscal expense,” which he said the government has to balance given the situation of the Canadian economy.
When asked by reporters why the government decided to impose the temporary tax cut instead of introducing targeted measures for those who need it most, Carney said the measure is “basically a recycling of higher money,” noting the government makes more money when fuel prices are high and is aiming to redistribute it to Canadians amid soaring fuel prices.
The announcement is the first measure introduced by the Carney government since it secured a majority after winning three byelections on April 13. Carney said last week the government was looking at ways to mitigate the impact of fuel price increases on consumers.
Fuel prices have surged in Canada and around the world in recent months amid the ongoing conflict in the Middle East that has caused disruptions to the global oil supply chain.
Conservative Leader Pierre Poilievre had called on the federal government earlier this month to cut all federal taxes on fuel for the rest of the year, including the excise tax, Clean Fuel Standard surcharges, and the GST. He said the measures would save Canadians 25 cents per litre and save the average family of four approximately $1,200 per year.
Carney told reporters that his government did not get the idea for the fuel tax cut measure from the Conservatives.
A recent poll conducted by Nanos Research indicated 39 percent of Canadians rank reducing fuel-related taxes as their top choice for Ottawa’s response to rising gasoline prices.
The average gasoline price in Canada increased more than 50 cents per litre over the last two months, reaching a peak of $1.91 per litre on April 7, according to Natural Resources Canada.
Commenting on Carney’s announcement, Poilievre said taxes on gas are the reason fuel prices are so much higher in Canada than in the United States.
“Today, Carney Liberals offered a fraction of that back to overtaxed motorists, leaving almost two-thirds of federal gas taxes in place for two-thirds of this year,” Poilievre said in an April 14 post on X.
NDP Leader Avi Lewis also commented on the government’s announcement, saying it’s “striking that the Liberals and Conservatives offer the same response to pain at the pump: siphon money out of the public purse instead of Big Oil’s profits.”
“Oil companies are on track to make tens of billions in windfall profits from Trump’s illegal war in Iran,” Lewis said in an April 14 post on X. “It’s their profiteering that’s driving up prices. It’s them who should pay.”
Carney’s announcement comes as other governments have also announced cuts to fuel taxes amid the ongoing Middle East conflict. The governments of Germany and Ireland announced measures to offer fuel tax cuts this week, while other governments across Europe have adopted similar policies, including Hungary, the Czech Republic, and Poland. The Australian government has also announced cuts.
Brent crude oil futures prices surged on April 12 after the United States threatened to block Iranian ports as Iran refused to agree to U.S. terms to give up its nuclear program. Oil prices hit a high of $103.49 per barrel on April 12, as U.S. and Iranian delegations ended their peace talks in Islamabad without a deal the same day.
U.S. President Donald Trump subsequently announced a blockade of the Strait of Hormuz, the critical oil shipping passageway that Iran had been blocking since the war began, leading to surging energy prices worldwide. NATO allies have so far said they would not support the U.S. blockade of the Strait of Hormuz during the ongoing conflict with Iran.
Naveen Athrappully contributed to this report.