The Liberal government will suspend the excise fuel tax on gasoline and diesel until Labour Day as the war in Iran sends energy costs surging, Prime Minister Mark Carney announced Tuesday.
Carney said the tax break will take effect April 20 and is expected to save Canadians 10 cents per litre on regular gasoline and four cents per litre on diesel.
Video: Liberals plan to suspend fuel excise tax
Speaking to reporters on Parliament Hill, Carney said suspending the excise tax is a “responsible, temporary measure” that offers “real relief” to Canadian families.
“There is an enormous shock in the global economy that is undergoing right now because of the conflict. And we have to assess what’s the best approach, given our core plan and what can we do in the short term,” Carney said.
Gas prices have surged in Canada and worldwide in recent months as the conflict in the Middle East constrains global oil shipments.
While average gasoline prices are down roughly 10 cents from the national peak a week ago, CAA’s gas price tracker shows an average cost of $1.73 per litre at pumps across the country on Tuesday — more than 40 cents higher than a year ago.
A media statement about the federal plan said it will also reduce prices for truckers and other businesses with heavy transportation costs. Carney said the excise tax on jet fuel will also be waived domestically, as airliners contend with ballooning energy costs.
Carney’s announcement stops short of the Conservative party’s call to waive the excise tax and GST on gas and diesel for the rest of the year, and to permanently end the clean fuel standard and industrial carbon tax.
Conservative Leader Pierre Poilievre has said his proposal would cut the cost of a litre of gasoline by 25 cents.
Carney told reporters that waiving the excise tax for a little over four months will cost the federal government roughly $2.4 billion, while the Conservatives put the price tag for their proposal at around $5 billion.
Poilievre argued Ottawa ought to use the “windfall” of higher tax revenue to offer Canadians a break at the pumps.
Carney said the Liberals are largely paying for the excise tax cut by “recycling” the revenues from the boost Canada’s economy typically receives from higher gas prices.
The prime minister justified the excise tax cut as a more responsible approach to managing federal finances while supporting Canadians and the broader economy.
“We didn’t just say, ‘Get rid of all taxes on gasoline and let’s spend $9 billion as if we’re not in government,’ which is actually what you do say when you’re not in government,” Carney said.
“But when you are in government, you have to choose, you have to balance, and this is the balance we’ve struck.”
U.S. President Donald Trump said Monday the American military had begun a blockade of Iranian ports as part of his effort to force Tehran to open the Strait of Hormuz.
— with files from The Associated Press
This report by The Canadian Press was first published April 14, 2026.