The Canadian Federation of Independent Business (CFIB) is welcoming Tuesday’s announcement by the federal government to temporarily suspend excise fuel taxes on gasoline and diesel as it will provide welcome relief for small businesses already squeezed by high costs.
“It is good to see both government and the official opposition supporting action on this critical issue,” said Dan Kelly, President of the CFIB.
“Business owners have been feeling significant energy cost pressures and uncertainty over the past two months. Nearly two-thirds of small businesses report they are currently absorbing additional fuel costs, while about a third have increased their prices as a result.
“The next step for the federal government should be to permanently eliminate the tax-on-tax treatment of charging the GST on gasoline and diesel fuel taxes. Provincial governments should also follow suit and pause their fuel excise and sales taxes.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 103,000 members across every industry and region.
On Tuesday, the federal government said: “The global landscape is rapidly changing. In response, Canada’s new government is focused on what we can control – building a stronger, more independent, more resilient economy. We’re building an economy where Canadians are empowered with greater security, certainty, and a lower cost of living.
“Global conflict and ongoing supply disruptions in the Middle East are driving up fuel prices around the world. To make Canada more energy secure and less reliant on external factors, our government is advancing major projects to realise Canada’s full potential in clean and conventional energy. We’re building big in electricity, LNG, and nuclear to provide all Canadians with clean, reliable, and affordable power. As we build for the long term, we are providing immediate relief to bring down costs for Canadians right now – including cutting taxes for 22 million Canadians, cancelling the consumer carbon tax, and protecting and expanding vital social programs.”
Prime Minister, Mark Carney announced that the government is temporarily suspending the federal Fuel Excise Tax on gasoline and diesel across Canada. Starting April 20, Canada’s new government will suspend the full amount of the tax on gasoline and diesel until September 7. This is expected to reduce Canadians’ bills at the gas station by 10 cents per litre on regular gasoline and 4 cents on diesel. The government is also temporarily suspending the federal Fuel Excise Tax on aviation fuels.
“We’re building a stronger, more resilient, and more independent Canadian economy. As we build, we’re cutting your taxes, reducing the costs of your homes, and providing you relief at the pump. We cannot control what other nations do. We’re focused on what we can control – building Canada strong for all,” said Carney.
The government said cutting the tax on gasoline and diesel until Labour Day is a responsible measure that will reduce operating costs for truckers and businesses in the food, agriculture, housing, construction, and delivery sectors. With lower costs and greater financial strength, businesses can hire more workers, confidently build, and export more products to global markets.
Canada’s new government was elected to build a more resilient economy – an economy that creates good careers, strengthens our sovereignty, and empowers all Canadians with a lower cost of living. We’re moving with speed and ambition to build a country where all Canadians have greater certainty, security, and prosperity, it added.
“The temporary suspension of fuel excise taxes next week will provide immediate relief across the retail supply chain particularly in transportation, last-mile delivery, and inbound freight. That will help ease margin pressure and, in some cases, slow price increases for consumers,” said Gary Newbury, Interim COO & Rapid Performance Recovery Specialist – RetailAID Inc.
“But this is a tactical move, not a structural fix.
“Fuel is only one component of the total cost-to-serve. For most retailers, labour, network design, inventory positioning, and operational discipline have a far greater impact on profitability.
“The real risk is that businesses treat this as relief rather than an opportunity. Stronger operators will use this window to improve routing, reset cost structures, and address inefficiencies as a coordinated strategy. Others will see a short-term margin lift, then face the same pressure when costs rise again.
“This buys time. It doesn’t fix performance.”
Retail analyst Bruce Winder said: “The federal government’s announcement to temporarily eliminate the Federal Fuel Excise Tax will help the retail industry at a time of uncertainty.
“From the consumers perspective, this will lower monthly expenses and allow for spending on retail goods & services, particularly as we enter the summer holiday travel season in a few months. More money in the pockets of consumers means they will spend more at retail. Especially for discretionary items.
“For retailers the benefit is at least two fold. They get the tailwind of additional consumer spending based on above, as well as a small break on transportation and operational costs at a time of heightened energy prices.”
George Minakakis, Founder and CEO of the Inception Retail Group, said: “Anything that reduces the financial burden this war is placing on consumers is a positive development. The more important question is whether it will be enough to prevent a deceleration in consumer spending.
“The full economic effect of this disruption has not yet worked its way through the system. Shipping remains uneven, supply chains are moving slowly, and we know that shortages are surfacing beyond oil and LNG. At the same time, several asian overseas markets that supply retail goods are also dealing with energy shortages and are rationing, adding further pressure to costs and availability.
“An end to the war would be an important first step, particularly as households are already contending with a wider affordability squeeze in food and energy. There is also ongoing uncertainty around trade. We still do not know what form the next trade arrangement will take, nor whether tariffs will be reduced, maintained, or prolonged.
“Retailers, meanwhile, will have little choice but to become more agile on pricing, inventory, and margin management.
“More broadly, I am concerned that consumers and businesses were already operating in an environment defined by economic uncertainty and affordability pressures. This war adds more complexity, and lower gas prices are good, but will it be good enough for consumers to keep shopping for anything other than essentials?”
More from Retail Insider:
How will the government ensure that the tax relief will actually flow through to the consumer and simply not be pocketed by the fuel retailers and have the pump prices not affected at all?
A more efficient method would be a line item on next year’s taxes.
Are we lowering the taxes on fuel for all foreigner airlinw carriers filling up while in Canada or all foreign motoring tourists filling their tanks while on holiday in CANADA?
This seems like a photo op that may not benefit the correct people or corporations.