Carney suspends Canada’s fuel excise tax as Iran war drives up prices

April 15 (UPI) — Prime Minister Mark Carney of Canada has announced a temporary suspension of the federal fuel excise tax amid ongoing instability in the oil market due to war in the Middle East.

Carney announced the move Tuesday during a press conference in Ottawa, stating the tax will be suspended from Monday through the end of Labor Day on Sept. 7.

“We all know that because of the war with Iran fuel prices have increased sharply around the world including here in Canada. So we’re taking more action to help build that bridge over short-term pressure,” the Liberal leader said.

The fuel excise tax is 10 Canadian cents per liter of regular gasoline and 4 Canadian cents per liter on diesel, equivalent to about 28 U.S. cents a gallon for gasoline and 11 U.S. cents a gallon for diesel.

Carney said the suspension also includes the tax on aviation fuels.

“To be clear, today’s cut to the fuel excise tax is a responsible, temporary measure, consistent with what it takes to build a stronger economy, a more affordable economy combined with sound fiscal management,” he said.

“When Canadians are facing financial pressures, they carefully manage their expenses and they expect their government to do the same.”

The tax will be reinstated Sept. 8, according to a statement from the Department of Finance, which estimates that the suspension will generate about $1.7 billion (CDN$2.4 billion) in total tax relief.

Ottawa argues that removing the tax will reduce operating costs for truckers as well as businesses in the food, agriculture, housing, construction and delivery sectors, lowering costs and reducing financial strain on the economy.

Since Feb. 28, when Israel and the United States attacked Iran, setting off war in the Middle East, gas prices in Canada and across the globe have surged.

According to government statistics, the average price of gasoline for the month of February was roughly $3.71 a gallon, or CDN$1.34 a liter. On April 8, the country experienced an average yearly high of $5.02 a gallon, or about CDN$1.82 a liter, according to figures from the Canadian Automobile Association.

The average price of a gallon of gasoline in Canada on Tuesday was $4.77, the non-profit said.