Federal fuel-tax pause set to end Sept. 7, raising prospect of higher pump prices

Canada’s temporary pause on federal fuel excise taxes is set to expire Sept. 7, which could increase prices at the pump if the measure is not extended.

The pause, announced by Prime Minister Mark Carney in April and effective April 20, reduced the federal gasoline excise tax from 10 cents per litre to zero and the diesel tax from four cents per litre to zero. The government estimated the move would provide more than $2.4 billion in tax relief this year.

Dan McTeague of Canadians for Affordable Energy said restoring the tax could add roughly 10 to 11 cents per litre to gasoline prices, depending on the region. That would mean several additional dollars for a typical 50-litre fill-up.

The timing could coincide with some stations switching to winter-grade gasoline, another possible upward pressure on prices. Statistics Canada said gasoline was the largest contributor to the annual rise in the Consumer Price Index in July, when prices were 25.7 per cent higher than a year earlier. The federal government has not said whether it will extend the tax break beyond Sept. 7.