Carney government to temporarily suspend federal gas tax starting next week

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The federal government is set to temporarily suspend the federal fuel excise tax on gas and diesel starting next week.

Prime Minister Mark Carney made the announcement in Ottawa on Tuesday, just hours after his government secured a majority through three byelection wins.

According to the federal government, the tax suspension is expected to reduce the cost of gas by 10 cents per litre on regular gas, and four cents on diesel.

The suspension will come into effect on April 20 and last until Sept. 7, and it comes as global oil prices remain volatile amid U.S.-Iran tensions.

Since the conflict began in late February, shipments along the Strait of Hormuz, a passage point for a fifth of the world’s energy, have largely been at a standstill. As a result, the average price of gas in Canada has surged by more than 40 cents per litre in certain regions.

Last week, Carney hinted his government was “looking at” ways to help as high gas prices persisted and amid growing pressure to help Canadians.

Speaking to reporters on Tuesday, the prime minister emphasized that the measure is “targeted” and temporary.

“To be clear, 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. “When Canadians are facing financial pressures, they carefully manage their expenses, and they expect their government to do the same.”

Poilievre calls measure ‘not good enough’

Conservative Leader Pierre Poilievre, presented an opposition motion in the House of Commons on Tuesday, for the federal government to adopt his party’s push to eliminate the federal fuel excise tax, the GST on fuel and the clean fuel charge until the end of this year.

According to Poilievre, those temporary tax cuts would drop prices at the pump by 25 cents a litre and save a family of four an average of around $1,200 for the rest of the year.

The Conservatives’ plan would also cost the federal government $5.25 billion this year, arguing the plan would be paid for by cutting federal spending in other areas, including the gun buyback program and cancelling the multibillion-dollar high-speed rail project between Toronto and Quebec City.

Poilievre, meanwhile, called the Liberals’ new measure “not good enough.”

“We will continue this fight. We know that the government has the money,” Poilievre said Tuesday.

Asked if his government’s new temporary measure was an idea from the opposition, Carney said “no,” but said he is “open to ideas from anyone.”

“If you’re choosing a fiscal measure, such as the gas tax, you’re balancing it against other priorities that the government has,” he added, while referencing programs like child-care and dental-care.

Will the Liberals extend the gas tax relief?

In an interview with CTV’s Power Play with Vassy Kapelos on Tuesday, Energy and Natural Resources Minister Tim Hodgson, was asked directly if the federal government would be open to extending the measure beyond Labour Day and he left the door open.

“What we will do is what we have done throughout Prime Minister Carney’s leadership. We will look at the situation as it exists in September. We will look at the fiscal realities,” Hodgson told Kapelos, later adding that if the Strait of Hormuz remains blocked, the government will “react in a pragmatic way.”

Since 1995, the federal government has charged an excise tax on gas at a flat rate of 10 cents per litre, while diesel has been taxed at four cents per litre since 1987.