The federal government’s pause of excise taxes on gasoline and diesel went into effect Monday as Canadians continue to feel the squeeze of the global oil crisis caused by the Iran war and the closure of the Strait of Hormuz.
Prime Minister Mark Carney announced the gas tax holiday last week, adding that “Canadians are feeling the pressures of everyday expenses right now.”
The pause, which started Monday, will continue until Sept. 7 — right up until the end of the Labour Day long weekend.
The tax holiday will remove up to $0.10 per litre on gasoline and $0.04 per litre on diesel fuel, Carney said, costing the government about $2.4 billion.
Get breaking National news
Get breaking Canada news delivered to your inbox as it happens so you won’t miss a trending story.
Average gas prices across Canada inched slightly lower on Monday, at $1.69 a litre. While it was still significantly higher than the $1.31 per litre compared to the same time last year, it climbed down from last week’s average of $1.74 per litre.
The suspension is largely due to the ongoing U.S.-Iran war, with the movement of shipments along the Strait of Hormuz having mostly been stalled.
Conservative Leader Pierre Poilievre had urged the government to lift the fuel excise tax, alongside “clean fuel standard and GST surcharges from gas and diesel would save consumers about 25 cents a litre.”
Along with the government’s suspension of the consumer carbon tax, the tax holiday will mean “reduced fuel prices on gas by up to $0.28 per litre,” Carney said.
Since the start of the Iran war, Tehran has blocked the Strait of Hormuz, which accounts for nearly 20 per cent of all oil trade on the planet.
The ceasefire between the U.S. and Iran remains fragile after U.S. President Donald Trump said the U.S. forcibly seized an Iranian-flagged cargo ship that tried to get around a naval blockade.
© 2026 Global News, a division of Corus Entertainment Inc.