Gas is going to get more expensive for Canadians next month
Relief at the pumps is coming to an end next month, meaning Canadians could soon start paying more to fill up on gas.
The federal government’s temporary pause on the fuel excise tax is set to expire on Sept. 7, meaning the tax will return to its full rate on Sept. 8.
Prime Minister Mark Carney first announced the pause on April 14, shortly after his Liberal government secured a majority.
In a press conference, Carney said fuel prices had “increased sharply” in Canada because of the war with Iran, so the government was taking action to help ease the pressure on Canadians at the pumps. The measure was estimated to provide more than $2.4 billion in tax relief this year.
The pause officially took effect on April 20 and cut the federal excise tax on gasoline from 10 cents per litre to zero. The federal tax on diesel was also reduced from four cents per litre to zero.
For those who don’t know, the federal excise tax on gasoline has been set at 10 cents per litre since 1995, while the federal diesel excise tax has been four cents per litre since 1987.
How much more will Canadians pay for gas?
Currently, sedan drivers save about $6 every time they fill up, while minivan and pick-up truck drivers save around $7 and $10 respectively, according to the Canadian Taxpayers Federation.
Dan McTeague, president of Canadians for Affordable Energy, says the return of the gas tax could add roughly 10 to 11 cents per litre to the price of gas, depending on the region. For the average driver, that could mean a few extra dollars every time they fill up a 50-litre tank.
The timing is a bit awkward, as this is around the same time, McTeague tells media, that some gas stations in Canada switch back to winter-grade gasoline, which could cause an increase at the pump once again.
If the conflict with Iran continues to disrupt oil supplies while demand rises, oil and gas prices could skyrocket even more.
For now, it’s a bit of a wait-and-see situation, but hopefully, prices won’t climb quite as high as expected.
According to GasBuddy data, the Canadian average reached 191.1 cents per litre in May, the highest average recorded so far this year. For some perspective, the highest national average ever recorded was 210.8 cents per litre back in June 2022.
Gas prices have also been a major factor in Canada’s recent inflation numbers.
Statistics Canada says that gasoline was the biggest contributor to the annual increase in the Consumer Price Index in July, with prices up 25.7 per cent from a year earlier, compared to a 20.5 per cent increase in June.
“Supply uncertainty stemming from the conflict in the Middle East, specifically the closure of the Strait of Hormuz, put upward pressure on gasoline prices for the third consecutive month,” the agency says. “Consumers paid the highest prices for gasoline since June 2022, when Russia’s invasion of Ukraine created supply uncertainty.”
There’s no word on whether the federal government will extend the gas tax break beyond Sept. 7.
If it doesn’t, Canadians will once again feel the pinch at the pump, so drivers should enjoy the current relief while it lasts.
With files from Isabelle Docto