Canada Extends Fuel Tax Suspension to January 2027 Amid Global Supply Disruptions
Canadian Finance Minister François-Philippe Champagne introduced Bill C-38 to extend the federal fuel excise tax suspension until January 31, 2027. The move aims to provide $2.9 billion in additional relief as global instability and Middle East conflicts keep fuel prices elevated.
On September 22, 2026, Canadian Finance Minister François-Philippe Champagne introduced Bill C-38, known as the Canadian Fuel Affordability Act. The legislation proposes extending the temporary suspension of the federal fuel excise tax until January 31, 2027.
The extension is expected to provide an additional $2.9 billion in fuel tax relief for Canadians. This brings the total estimated tax relief for the 2026-27 fiscal year to $5.3 billion. The original suspension began on April 20, 2026, saving consumers up to 10 cents per litre on gasoline and 4 cents per litre on diesel.
This legislative action responds to rising fuel costs driven by global instability and supply disruptions in the Middle East. Since March, fuel prices have remained elevated due to the start of the U.S. war on Iran and the closure of the Strait of Hormuz. Additionally, escalation of conflict in Yemen between the Houthis and Saudi Arabia raised oil prices after Saudi Arabia stopped operations at its East-West pipeline.
According to recent reports, average gas prices across Canada stood at $1.82 per litre, approximately 10 cents higher than a month prior. The government stated that the continued relief supports lower everyday costs for drivers and aids sectors such as trucking, food, agriculture, housing, construction, delivery, and aviation.
Following the full suspension period ending January 31, 2027, federal fuel excise tax rates will be reduced by 50% from February 1 to March 31, 2027. During this transition phase, rates will be set at 5 cents per litre for gasoline and unleaded aviation gas, 5.5 cents per litre for leaded aviation gas, and 2 cents per litre for diesel and aviation fuel. Effective April 1, 2027, rates are scheduled to return to their full levels: 10 cents per litre for gasoline and unleaded aviation gas, 11 cents per litre for leaded aviation gas, and 4 cents per litre for diesel and aviation fuel.