Canada’s Fuel Excise Tax Set to Return Sept. 7; Poilievre Pushes Extension to 2027

Canada’s temporary fuel excise tax suspension expires September 7, and Conservative Leader Pierre Poilievre is pushing Prime Minister Mark Carney to extend the break until Canada Day 2027. The federal government removed the 10-cent-per-litre tax on gasoline and 4-cent-per-litre tax on diesel in April, saving drivers about CAD$2.4 billion in 2026. With gasoline prices at CAD$1.67 per litre and up 25.7% year-over-year, the debate over whether to keep the relief in place is intensifying.

Why the tax break is expiring

Prime Minister Mark Carney suspended the federal fuel excise tax in April largely due to the U.S.-Iran war and supply disruptions affecting the Strait of Hormuz, which normally handles about one-fifth of the world’s crude oil. The temporary measure was set to end on Labour Day, September 7. West Texas Intermediate crude oil was hovering near US$82 per barrel as of mid-August, down from a recent high of US$83 but up from US$75 a week earlier.

Poilievre’s push for a longer pause

In a letter to Carney on August 16, Poilievre urged the extension until Canada Day 2027, arguing that cost-of-living pressures have worsened since April. He cited a report from the Organisation for Economic Co-operation and Development showing Canada had the highest food price increases in the G7. Poilievre wrote: “A tax hike on fuel is a tax hike on everything.” The Canadian Automobile Association reports the national average for regular gasoline is CAD$1.67 per litre, up from CAD$1.64 a week prior and CAD$1.33 a year ago.

The government’s counter-argument

Government supporters argue the scheduled return of the tax is not a new increase, but the end of a temporary discount. The federal government estimates the four-month tax holiday provided CAD$2.4 billion in relief to Canadians in 2026. When combined with the elimination of the federal consumer carbon price, the two measures reduced federal charges on gasoline by up to 28 cents per litre. The government also implemented an income-tax reduction affecting nearly 22 million Canadians, with Finance Canada saying a two-income family can save up to CAD$840 annually.

Inflation and fuel prices remain elevated

Statistics Canada reported that annual inflation climbed to 3.0% in July 2026, up from 2.8% in June. Gasoline prices were the main driver, rising 25.7% compared with July 2025. Excluding gasoline, inflation held steady at 2.2%. For Canadian households, rising fuel costs increase the expense of commuting and everyday transportation, adding pressure to monthly budgets as the tax break approaches its end.

Final Thoughts

Carney faces pressure from both opposition and public opinion to extend the fuel tax relief, but government officials worry about the impact on deficit reduction. The September 7 deadline will force a decision on whether temporary relief becomes permanent policy or returns to standard rates.

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