Fuel tax pause will help higher-income families the most: budget watchdog

A new report from the Parliamentary Budget Officer reveals that Ottawa's temporary suspension of the federal excise tax on gasoline, diesel, and jet fuel is providing a larger break to higher-income households, primarily due to their increased fuel consumption. The federal government has extended this pause until 2027, with half of the tax rate set to resume in February 2025 and the full rate on April 1, 2027.

While the average family will save approximately $276 during the pause, those in higher income brackets can expect to save around $468, compared to $132 for those in the lowest income quintile. This tax relief is a result of the government's attempt to provide Canadians with relief from a global energy shock triggered by the Iran conflict.

However, the Liberals' other major affordability program, the Canada Groceries and Essentials Benefit, is more targeted towards lower-income households. Finance Minister François-Philippe Champagne's spokesperson, John Fragos, emphasized that the fuel tax pause is a uniform measure that applies to all Canadians based on their driving habits.

He also noted that the relief on diesel costs could benefit businesses and ultimately lower consumer prices in stores, but this may not occur if corporations retain those savings. The budget office anticipates the total cost of the fuel tax pause to be $4.9 billion, slightly below the government's estimate of $5.3 billion.