Ottawa stopped collecting federal excise tax on gasoline, diesel and aviation fuel on 20 April 2026. In September it extended the pause to 31 January 2027, with half rates from 1 February to 31 March 2027. Bill C-38, the Canadian Fuel Affordability Act, puts the extension into law. On 8 October the Parliamentary Budget Officer published an updated cost estimate for it (ES-2627-004-S, author Zachary Vrhovsek), using fuel-sales data from April to June.
The PBO assumes every cent of the tax cut reaches the pump. If retailers or refiners keep some of it, families save less.
What it costs
The PBO’s Table 1, on an accrual basis and including the knock-on loss of GST:
- Gasoline: $3.760 billion ($1.722 billion for 20 April–7 September; $2.037 billion for 8 September–31 March).
- Diesel: $1.065 billion ($473 million and $593 million).
- Aviation fuel: $118 million.
- Total: $4.943 billion in 2026-27: $2.247 billion for the spring announcement and $2.695 billion for the September extension.
The PBO says the measure would count as an operating outlay, not a capital investment, under the government’s capital budgeting framework. That matters because Ottawa’s fiscal anchor targets balancing the operating budget. When the extension was announced in September, the government put total relief for 2026-27 at roughly $5.3 billion; the PBO’s figure is lower, and the two may not be built on the same basis.
Who gets what
| Family income quintile | Per family | Total | Share |
|---|---|---|---|
| Lowest (up to $41,064) | $132 | $473M | 10% |
| Second ($41,065–$73,038) | $199 | $712M | 14% |
| Third ($73,039–$114,423) | $251 | $899M | 18% |
| Fourth ($114,424–$182,007) | $331 | $1,185M | 24% |
| Highest ($182,008 and up) | $468 | $1,675M | 34% |
Since its May estimate, the PBO has switched from households to “economic families” (with people living alone counted as one-person families) to use newer StatCan income data. It says this does not change the cost.
Caveats the PBO flags
- It assumes 100% pass-through of the tax savings to families. Savings kept by corporations would change both the cost and who benefits.
- It did not model behaviour, such as people buying more fuel because it is cheaper.
Where C-38 stands
LEGISinfo shows C-38 at report stage in the House. The Finance committee reported it back without amendment on 6 October. On 8 October, by unanimous consent, the House ordered that on Monday, 19 October it will sit until midnight. At 6:30 p.m. it will turn to C-38, with no quorum calls, dilatory motions or unanimous-consent requests after that, except a motion to see the clock (Journals No. 148). Third reading and the Senate are still to come.
What this piece refuses
Do not call this a $4.9 billion “handout to the rich”. The relief is a flat per-litre cut, and higher earners save more dollars because they buy more fuel. Do not say families “will get a $276 cheque”: it is an average saving at the pump, and only if prices fully reflect the tax cut. Do not treat the PBO’s $4.9 billion and the government’s roughly $5.3 billion as a contradiction without knowing how each was calculated.
Contested: Supporters say the pause gives quick relief while fuel prices are high. Critics on the right say 4¢ off diesel is too small for truckers and farmers, a point the Conservatives pressed in the supply motion the House rejected 133–196 on 7 October. Critics on the left and some economists say a flat fuel cut is poorly targeted, and the PBO’s table shows the top fifth getting 3.5 times the dollar savings of the bottom fifth. The PBO takes no side.
Bottom line
Verified as of 9 October 2026: the PBO prices the federal fuel excise pause and February–March half rates at $4.943 billion in 2026-27, an average of $276 per family, from $132 to $468 by income. It assumes full pass-through. C-38, which legislates the extension, gets a late sitting on 19 October. Watch report stage and third reading that night.
