Ottawa extends gas tax freeze as diesel hits record high

Some relief was announced at the gas pumps on Wednesday.

The federal government will extend its pause on the excise gas tax until the end of January. It is a 10-cents-per-litre savings, but critics say it is still not enough to move the needle.

Gas prices in the Niagara Region were sitting just shy of $1.80 per litre Wednesday, and that already high cost is expected to tick up another three cents at midnight.

However, drivers who need diesel are the ones really feeling the pinch.

“[Thursday] will be the all-time high ever paid here in Hamilton, the Greater Toronto Area, Ontario, Canada, really around the world,” said gas price analyst Dan McTeague.

The price of diesel is expected to jump 11 cents overnight to 243.9 per litre.

“We could describe this as an energy crisis,” McTeague said.

While much of the instability in prices is caused by conflicts between the United States and Iran closing the Strait of Hormuz, Canada’s federal government made an announcement that officials hope will ease some of those prices.

“Canadians didn’t cause these global challenges, it’s very clear. But they are feeling the consequences,” said federal Finance Minister François-Philippe Champagne.

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The federal Liberals first paused the excise fuel tax in April, saving Canadians around 10 cents per litre on regular gasoline and four cents per litre on diesel.

Wednesday’s announcement extends that pause until Jan. 31.

“From Feb. 1 through March 31, 2027, the tax will return to half its regular rate, before resuming fully on April 1, 2027,” Champagne said.

Critics have been calling on the federal government not just to extend the pause, but to get rid of the tax altogether.

Premier Doug Ford wrote of the news: “Good. Now let’s make it permanent.”

McTeague wants to see the federal and provincial governments remove the HST rather than the excise tax.

“Governments are still doing extraordinarily well by the higher prices, given that the HST is still applied,” McTeague said. “I think that’s where the consumer and voters should have focused to get better bang for their buck.”

Answering questions, the finance minister said the tax pause is costing the government $5.3 billion in lost revenue and would not commit to further cuts.

“I think this is a measure which is very targeted and very broad-based,” Champagne said.

Mid-September will also see gas stations switch from the summer gasoline blend to winter, saving around seven cents per litre.

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