Families across Canada are struggling with an affordability crisis. This is an urgent problem – and the government should be committed to delivering real solutions.
Unfortunately, that’s not what Prime Minister Carney did earlier this week when he decided to suspend the federal Fuel Excise Tax on gasoline and diesel.
Let’s be clear about what this new policy is: it’s an enormous fossil fuel subsidy. A $2.4 billion subsidy, to be exact.
Instead of taking policy suggestions from the leader of the Opposition, Pierre Pollievere, PM Carney should address the root cause of rising gas prices: the petroleum industry’s swelling profit margins.
A 10-cent tax isn’t causing an oil price shock, Big Oil is.
The government announced they would temporarily suspend the federal Fuel Excise Tax on gasoline and diesel, as well as aviation, until the end of summer. This measure is meant to reduce the cost of gas by 10 cents per litre, and diesel by 4 cents.
Of course, there’s nothing stopping oil companies from once again jacking up the price that Canadians pay at the pump to cover that difference. And that brings us to the real culprit behind the spike in prices: profiteering by oil companies.
Canadian oil producers aren’t paying more to produce the gas we buy, their product doesn’t move through the Strait of Hormuz. But Canadian energy policy allows these companies to charge world prices, even though their costs aren’t rising. What is rising is their profits – to the tune of nearly $100 billion this year alone.
PM Carney ignores real solutions, prioritizing fossil fuels over people
You know what would actually help Canadians avoid future pain? Getting off of fossil fuels. They are expensive, volatile – and unnecessary. We have better options, like electric vehicles, buses and heat pumps. In fact, Clean Energy Canada found that while pausing the gas tax will save a typical driver $17 a month for five months, whereas EVs save $250 a month indefinitely.
Of course, to ensure that power prices stay affordable, governments also need to make sure the grid is powered by the sun and wind – not fossil fuels.
The gas tax suspension also fails to deliver meaningful support to Canadians who need it most.
When governments reduce fuel prices for everyone, the largest subsidies automatically flow to those with the highest consumption patterns—people who own larger homes, drive multiple vehicles and fly frequently.
Instead, the government should look at how to deliver long-term, targeted support for Canadians – like expanding the GST rebate. The government’s priority should be people, not fossil fuels.
Who should foot the bill, communities or Big Oil?
The government anticipates that this pause on excise tax will remove $2.4 billion dollars from federal coffers over the next four months. When the federal government forgoes revenue from fossil fuel taxes, they prevent municipalities from accessing resources that could be spent on delivering the services and infrastructure which Canadians rely on. And of course when taxes are cut, they are hard to put back into place.
Municipalities are struggling. They shouldn’t pay the bill. Oil and gas companies should pay a windfall profits tax like the one other countries have had for years. According to the Canadian Centre for Policy Alternatives, a windfall profits tax could bring in $9-20 billion this year alone.
That’s enough money to both support struggling families and help transition our cities and homes off of fossil fuels once and for all. It could help pay for public transit and help households afford EVs and heat pumps – all things that will save money in the long run.
Violating the promise to end fossil fuel subsidies
The federal government has long promised to end fossil fuel subsidies. In fact, because of the advocacy of people across the country, the government put in place rules to ensure tax that our public dollars don’t prop up fossil fuels.
So this newest move by PM Carney isn’t just a bad policy, it violates the long-standing promise that this government made to Canadians.
