Ottawa’s gas tax pause is offering a bigger break at the pumps to the households that earn the most largely because they buy more fuel, the parliamentary budget officer says in a new report.
The federal government temporarily suspended the federal excise tax on gasoline, diesel and jet fuel in April. The pause was supposed to end on Sept. 7, but the government announced last month it would extend that pause into 2027.
Half the tax rate will be reapplied starting Feb. 1 and the tax will be restored to the full rate on April 1.
Parliamentary Budget Officer Annette Ryan said in a new report Thursday that the total tax pause will save the average family $276 over the course of the roughly one year it’s in place.
But those savings increase for families in higher tax brackets. The PBO estimates that families in the highest income quintile can expect to save an average of $468, while those in the lowest quintile would see just $132 in relief.
Fuel costs often make up a bigger share of lower-income families’ total budgets but households that earn more also typically spend more at the pumps.
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The Liberals paused the fuel excise tax to offer Canadians relief from a global energy shock driven by the war in Iran.
The government has not provided a per-family estimate of tax savings from the program. Ottawa says the suspension removes roughly 10 cents from a litre of gasoline and four cents from a litre of diesel.
John Fragos, spokesperson for Finance Minister François-Philippe Champagne, said the fuel tax pause is a blanket measure that applies evenly to all Canadians based on how much they’re driving.
The Liberals’ other major affordability program, the Canada Groceries and Essentials Benefit, is income-tested and proportionally benefits lower-income households with direct payments, he noted.
Fragos also said that the relief on diesel costs can also pass through Canadian supply chains. Those savings per fuel litre can cut costs for businesses and bring down final prices for consumers on store shelves, he argued.
The PBO noted its estimates assume total savings from the tax break are passed on by producers, but those projections could be affected if corporations retain those savings.
The budget office expects the total cost of the fuel tax pause will be $4.9 billion, just under the federal government’s estimate of $5.3 billion.
The federal Conservatives attempted to pass a motion this week to extend the tax break and cut other fees associated with diesel production, but the proposal was voted down by other parties in the House of Commons on Wednesday.
Garbage news articles like this do not help. That’s like saying reducing food prices favors the obese. Focus on real news
You’ve got to be kidding me! Of course the people who buy the most gas will save the most money! Low income and non working person’s get plenty of rebates and cheques for doing absolutely nothing! I spend thousands every month at the grocery store but I don’t get a penny back for the grocery rebate!
This is a big problem in Canada, extreme navel-gazing. It’s hard to accept that any government agency would spend money on a temporary tax suspension that was due to collecting too much, strictly because of temporary market fluctuations. Could someone have a word with them, or perhaps examine THEIR waste of government money.
Well duh. That’s kind how consumption taxes work…. If you buy more you pay more, the corollary to this being that a discount will be proportionally higher. Quit trying to spin this as anything more than that.
How about a 50% reduction in our income tax? Tax consumption and property not people’s labour.
What a stupid article!
Remind me again who the grocery benefit helps? I don’t see a cent of that. Heaven forbid we get something once in awhile after paying for everyone else’s benefits…
And the total yearly savings will help the average person a total of of what?
The savings don’t do a thing, zero. What a liberal slap in the face to the people of this country.
Wow… Einsteinism at work here…great reporting. I wish I got paid to state the obvious. Lower incomes get plenty of breaks and support. The middle class with families are struggling to pay for things and take the kids to activities, so thanks for that. Most lower income are fresh grads or people starting out without all those additional expenses of a more complex life.
“the total tax pause will save the average family $276 over the course of the roughly one year”
THAT is why the UCP giving us $100 each quarter was a better deal than a tax cut.
Sadly the UCP changed the $100 rebate to a tax cut.
People getting paid to state the obvious. Yes, those who buy more fuel will save more. Boom
Thanks for the crumbs King Carnage, you’re so generous!
DUH !!! Of course they will save the most because they will spend the most. Who is the genius who discovered that one.
Well anyone that didn’t figure that the more you buy the more you save. But with Carney and this Liberal government you have to be grateful for the pennies you save.
“to the households that earn the most largely because they buy more fuel”
How many tax dollars did it cost us to state the obvious?
Alberta out!!!
What a completely useless story.
A drop in prices is welcomed by all. And since fuel costs make up a larger % of budget for a lower income family, the reduction in price will be more noticed by them and not the wealthier family, not the other way around.