No 10-cent-per-litre increase on September 8; the suspension now runs to January 31, 2027.
Half rate of 5 cents (gasoline) and 2 cents (diesel) from February 1 to March 31, 2027.
Extension costs $2.9 billion more; total relief is $5.3 billion for 2026-27.
The 10-cent-per-litre increase expected on September 8 is off. Finance Minister François-Philippe Champagne announced Wednesday that the suspension of the federal fuel excise tax on gasoline and diesel is extended to January 31, 2027, then cut to half rate through March 31, 2027.
Ottawa points to U.S. tariffs and the conflicts in Europe and the Middle East as the drivers behind higher prices. The announcement comes three days after regular gasoline climbed back above $2 per litre at several stations in the greater Montreal area, one of the highest-priced markets in the country.
0 cents until January 31, 5 cents in February and March, 10 cents from April 2027
The tax comes back in three steps:
- Through January 31, 2027, inclusive: excise tax stays at 0 cents per litre on gasoline and diesel.
- February 1 to March 31, 2027: half rate, meaning 5 cents per litre on gasoline and 2 cents on diesel.
- From April 1, 2027: full rate returns, 10 cents per litre on gasoline and 4 cents on diesel.
The release uses conditional language for the 2027 rates because the legislative proposals still have to pass Parliament. The original suspension, in place since April 20, was scheduled to end on Labour Day, September 7.
$5.3 billion in relief for 2026-27
The extension adds roughly $2.9 billion to the federal bill, the Department of Finance says. Combined with the $2.4 billion estimated for the original measure, total relief is now pegged at $5.3 billion for the 2026-27 fiscal year.
Ottawa says gasoline prices dropped 11 cents per litre on April 20, the day the suspension took effect. That figure comes from the government, not from an independent source.
A reversal from early August
Here’s what changed in a month. In early August, Champagne suggested in an interview with Saguenay radio station CKAJ that the tax would return in September as planned, citing fiscal responsibility. The Conservatives, the Canadian Taxpayers Federation and Ontario’s Ford government had been pushing for an extension, and a Léger poll released in August found 63 percent of Canadians opposed ending the tax holiday.
Ottawa did not give the Conservatives everything they asked for. They wanted a permanent suspension plus the removal of the GST on gasoline and diesel. Wednesday’s measure remains temporary and phases the tax back in over the spring.
The government also points to the cancellation of the federal consumer carbon price on April 1, 2025, which it says cut gasoline prices by up to 18 cents per litre in most provinces and territories compared with 2024-25. Quebec, which runs its own cap-and-trade carbon market, was never under the federal consumer charge.
What it means at the pump
In practical terms, a litre posted at 200.9 cents on Sunday in Montreal will not climb another 10 cents next Tuesday because of the tax. Drivers elsewhere in Canada get the same reprieve. Pump prices remain tied to the crude market, which has been under pressure since the closure of the Strait of Hormuz.
“This will provide meaningful relief for families and businesses and help make everyday life more affordable,” Champagne said.
Energy and Natural Resources Minister Tim Hodgson added that “Canadians should not have to pay for what they did not cause – whether it is disruption in the Middle East or an unjustified trade war.”
For drivers, the next dates to watch are February 1, 2027, when 5 cents per litre comes back, and April 1, 2027, when the remaining 5 cents follow.
