Bill C-38 would extend fuel excise-tax suspension to Jan. 31, 2027, then halve rates through March 2027

The federal government has introduced Bill C-38, a proposal that would extend the current suspension of the federal fuel excise tax on gasoline, diesel and certain aviation fuels through Jan. 31, 2027, and then cut the tax rates in half from Feb. 1 to March 31, 2027.

For people in Northeast Ontario and elsewhere who buy gasoline or diesel, the federal excise tax is one of the charges included in pump prices. If the bill becomes law, the reduced rates would apply nationally to gasoline, aviation gasoline (leaded and unleaded), diesel fuel and aviation fuel.

In a Sept. 22 news release, the Department of Finance said the minister introduced the bill the day before. The department said the legislation is meant to respond to higher fuel costs linked to global instability and supply disruptions in the Middle East.

Under the proposal, the excise-tax suspension would remain in place until and including Jan. 31, 2027. From Feb. 1, 2027, to March 31, 2027, the excise-tax rates would be:

• 5 cents per litre for gasoline and unleaded aviation gasoline
• 5.5 cents per litre for leaded aviation gasoline
• 2 cents per litre for diesel fuel and aviation fuel

Finance Canada said the rates would return to their full levels effective April 1, 2027: 10 cents per litre for gasoline and unleaded aviation gasoline, 11 cents per litre for leaded aviation gasoline, and 4 cents per litre for diesel fuel and aviation fuel.

According to Finance Canada, the excise tax was temporarily suspended on April 20, 2026, reducing the tax by 10 cents per litre on gasoline and unleaded aviation gasoline, 11 cents per litre on leaded aviation gasoline, and 4 cents per litre on diesel fuel and aviation fuel.

Finance Canada also said gasoline prices fell by 11 cents per litre on the first day the suspension took effect.

The department estimated the extension would reduce federal excise-tax revenue by an additional $2.9 billion, bringing the total estimated reduction to $5.3 billion in 2026–27.

Finance Minister François-Philippe Champagne said a typical 50-litre fill-up would cost about $5 less while the full suspension remains in place.