Canadian Fuel Affordability Act

Bill C-38, Canadian Fuel Affordability Act · Second reading · now law Where it stands

What the law does

The law extends the temporary suspension of the federal fuel excise tax until January 31, 2027. Between February 1, 2027, and March 31, 2027, excise tax rates on fuels are set at 50% of their regular rates.

Official text (opens in a new tab)

29 statements

Luc Berthold, Mégantic—L'Érable—Lotbinière

Conservative
“The government is taking its ideas from the Conservatives. We asked to cut gas taxes in 2022, in 2024, and again in April 2026, just four days before the government introduced its plan.”
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Official Hansard

Madam Speaker, the first time we talked about cutting taxes on gas was in May 2022. After that, we repeated the ask in June 2024, and we tabled a motion here to cut all taxes on gas on April 2026, which was four days before the government put its own proposal on the table. Yes, the government is taking a lot of ideas from the Conservatives.

Kelly McCauley, Edmonton West

Conservative
“Low-income seniors should automatically get the extra money they qualify for. The government is not doing this. When will it start?”
Official Hansard

Madam Speaker, I would like to thank my colleague for splitting her time with me today. I am glad she brought up the issue of automatic enrolment. We actually studied it at public accounts. The Auditor General was quite pointed in her comments about the government’s lack of interest in supporting Canadians. One of the biggest issues we found, and I found this both anecdotally and in the studies, is the lack of automatic enrolment for the guaranteed income supplement. This is not covered in the government’s current plans. When will the federal government be introducing automatic enrolment for seniors who could benefit from the GIS?

Kelly McCauley, Edmonton West

Conservative
“This bill cuts the gas tax, but it does not go far enough. Conservatives have pushed for a bigger cut for a long time.”
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Official Hansard

Madam Speaker, I am pleased to rise to such stupendous applause today. I thank both members for cheering me on. I am pleased to rise to speak to Bill C-38, what I call a half-measure tax cut. Why is it a half-measure? Well, the Conservatives for a long time have been pushing for a more extensive gas tax cut. Madam Speaker, are you interrupting me?

Kelly McCauley, Edmonton West

Conservative
“I support this bill to cut fuel taxes, but it does not go far enough. High gas and diesel prices make food and everything else cost more. The government voted against our plan to cut fuel taxes in May, and they claimed it would only help the rich. Now they are doing it themselves. I want them to explain why they changed their minds, and I want them to cut fuel taxes even more.”
  • A repeated line

    “Permanently scrap the clean fuel standard.”

    Said 6 times by 6 members since May 26.

    Every time it was said
Official Hansard

Madam Speaker, as I mentioned, the Conservatives are pushing for a more extensive gas tax cut to make life more affordable for Canadians. Last May, in fact, we put through an opposition day motion calling for the government to offer Canadians immediate relief by ending all federal taxes on gas and diesel for the rest of the year, including the GST; and permanently scrapping the clean fuel standard. We then called for it to be completely eliminated up until Canada Day next year. Of course, we saw that the Liberals had to be dragged, kicking and screaming, to offer a partial tax break to Canadians. The price of gas is at probably an all-time high from what I have seen in my many years. It is $1.81 a litre in Edmonton, of all places, but I understand the provincial government is offering a 13¢ cut, coming on October 1. I just heard that today. More important, the price of diesel fuel has gone through the roof, at about $2.80 to $2.90 a litre. A lot of Canadians, when they think of diesel, just think of the crazy hippie down the road still driving the Volkswagen Rabbit on diesel or perhaps someone driving a big truck on diesel. They do not understand that diesel fuel is very much the lifeline of Canadian industry, farming and trucking. Where the price of diesel goes, so goes inflation. People who want to geek out on something should take a look at something called the crack spread. Generally simplified, that is the spread between the price of refined products and the price of oil, and it is at an all-time high right now. If they want to look into it more I suggest they follow a chap named Richard Dias on Twitter. He talks about it a lot. It is a coming problem for Canadians because they see the price of oil being one thing, but the price of gas and diesel, the refined products, is decoupling in a lot of ways from the price of oil and going even higher. Again, as go diesel prices, so go food costs and many other costs. I am glad that the government is at least offering some partial relief at the pumps. Again, it is unfortunate that it has had to be nagged into extending it, and only partially, but even a partial cut is better than no cut at all. It helps Canadians now. Keeping fuel taxes low should remain a priority going forward. For years, we have seen the current government claiming the carbon tax was not inflationary and fighting to keep the carbon tax. Like caving on the carbon tax, I am glad the Liberals caved a bit on extending the fuel tax rebate at least a bit longer. Currently, it is suspended only to January 2027, then resumes at 50% and then the full amount returns on April 1, 2027. Basically, the Liberal government is putting an expiry date on affordability. I mentioned at the beginning of my speech that the Conservatives put through an opposition day motion to eliminate all taxes on gas and diesel, etc., back in May, and the current Liberal government voted the motion down. I want to quote some of the Liberal members when they were arguing against a tax rebate for Canadians or a reduction of gas taxes. I will start with my friend and colleague from Winnipeg North. He said, “Why the hypocrisy from the Conservative Party of Canada when it comes to the issue of affordability?” This is the same member whose interventions I stopped counting at 40 times. He stood in this House at least 40 times during the last couple of years, defending the carbon tax as being a boon for Canadians for affordability. In May, he was arguing against further tax cuts on gas and now he is saying it is a panacea for everything. It is funny how, when the Conservatives proposed a gas tax cut, it was bad but now it is good. I am going to continue with the hypocrisy line a bit longer. As for the finance minister who introduced the bill, I counted over the last couple of years that he stood 25 times in this House defending the carbon tax. Every time the Conservatives put through a motion to eliminate the carbon tax, the finance minister, who is all about affordability now, stood and defended the carbon tax. The finance minister also stated that a gas tax is really not that important. Because 80% of the price of fuel was because of oil, therefore a tax change did not matter. Continuing on, a Liberal member stated that what we need to do is reduce taxes in ways that are responsible and to continue to invest in critical social programs. In May, the Liberals were arguing against a tax cut, but now a tax cut is good. A tax cut was bad before, but a tax cut is good now. Again, it is hypocrisy. Another member, a senior member, stated basically that tax cuts to gas are bad because they only help the rich: “This idea that the impact is going to be more substantial on low-income Canadians than on Canadians who are much more well off is just absolutely ludicrous... It does not make any sense”. Guess who actually says gas taxes are progressive and disproportionately hurt low-income Canadians. It is a bunch of far-right-wing think tanks such as the Canadian Centre for Policy Alternatives, the Canadian Labour Congress and the Smart Prosperity Institute. The government was actually stating in May that it did not want to cut taxes, because it would have only helped the super wealthy. Even though the PBO and others stated the carbon tax disproportionately hurt low-income Canadians, the government argued in May that tax cuts only help the wealthy. What are we doing today with Bill C-38? We are debating a tax cut. I guess super wealthy back then was different than super wealthy now. He went on and said, “What the Conservatives are proposing is more of a benefit for the ultrawealthy”, so I have to ask the Liberals why a tax cut in May was for the ultra-wealthy and a tax cut now is not for the ultra-wealthy. Are they just completely misinformed or perhaps, as the member for Winnipeg North states, “hypocrites”? The defence minister said, “[Conservatives know] that this handful of tax changes [that they had proposed in May] are not going to contend with the economic challenges we are facing in the United States. They are not going to contend with the Ukrainian war. They are not going to contend with the gulf war.” The Minister of National Defence, in June, was attacking Conservative-proposed tax cuts. They were no good, because they were not going to do anything about the war in Ukraine nor the war in Iran, so I will invite any member of the Liberals to stand up in the questions period and tell me what has changed since the minister of defence said that tax cuts would not change what was going on in the States. Why now? I am not arguing we should not do this tax cut. I am just saying we should do more, but I was calling out the hypocrisy of the Liberals who were fighting against Conservative proposals to cut taxes in May, and all of a sudden, under Bill C-38, the tax cuts not only are good and no longer help the “ultrawealthy”, as the Liberals say, but apparently, according to the minister of defence, they would fix the Ukrainian war, they would fix the war in Iran and the gulf and fix our issues with the U.S. It is wonderful. Another member says it is “absolutely crazy” to make the claim that cutting gas taxes helps low-income people. Again, it was utterly crazy in May, but somehow good now. We know cutting taxes is good. Milton Friedman says he is in favour of any tax cut at any time. I would agree. I am glad the Liberals are doing this, but I just point out the hypocrisy of fighting a gas tax cut in May and all of a sudden saying it is a glorious thing to do now. The member for Mount Royal complained that cutting gas taxes would hurt the environment. He also said that taxes have nothing to do with the price at the pump. Is that not amazing? A gas tax cut in May would have hurt the environment, and gas taxes had nothing to do with the price at the pump, but all of a sudden they do now. We also say fuel regulations do not add to the price Canadians pay at the pump, yet the PBO says it is going to be 17¢. Environment Canada says it will cost us at the pump. I realize my time is up. I will end it here. I will open questions. I again thank the Liberals for finally listening to the Conservatives and bringing in a tax cut to help Canadians.

Kelly McCauley, Edmonton West

Conservative
“The fastest way to lower diesel prices is to cut taxes. We should remove the sales tax, the clean fuel standard, and the industrial carbon tax on diesel.”
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Official Hansard

Madam Speaker, there is a much simpler answer to that, and that is to reduce the taxes on diesel. As the Conservatives have suggested, eliminate the GST on diesel, eliminate the clean fuel standard that is costing money, even according to the PBO and Environment Canada, and eliminate the industrial carbon tax. That would be the fastest thing to help reduce the price of diesel.

Kelly McCauley, Edmonton West

Conservative
“The government needs to save money by cutting contracts with outside consulting companies like McKinsey and Deloitte. Public servants told our committee that their own departments could have done this work instead of paying these firms.”
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Official Hansard

Madam Speaker, I do miss my colleague on the OGGO committee. I look forward to the day when he does return to join the government operations committee. The member has brought up a lot of valid facts. One of the issues he talked about was outside consultants. The Liberal-friendly McKinsey, one of the most vile, reprehensible companies in the entire world that helped supercharge the opioid crisis, continues to receive contracts from the Liberal government. In committee, we actually heard government employees testify that work they proposed to do and could cover within their own bureaucracy was pushed out to McKinsey for no reason. We heard this again and again, whether it was to Deloitte, McKinsey or others. The government should look at finding ways to save money for Canadians, and it could probably start with its management friends at McKinsey, Deloitte and all the other outside consulting companies.

Kelly McCauley, Edmonton West

Conservative
“Liberals claim the carbon tax and fuel rules do not raise costs. But government reports and experts show they do drive up prices.”
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Madam Speaker, it is always wonderful to see the member here. He reminds me a bit of that Seinfeld episode with George Costanza when he was actually living underneath his desk. The member is here so much, I wonder if perhaps he is like George Costanza, setting up under his desk. I am glad the member brought up a bit about the carbon tax. We actually counted, and we found 83 different members who denied that the carbon tax had an effect on inflation. Then last year, the public accounts came out and actually stated the government expected inflation to drop because it has actually eliminated the carbon tax. We see the same thing now with the industrial carbon tax and the clean fuel regulations. Liberal after Liberal says it has no effect. The PBO and Environment Canada itself have said there is a cost to it.

Tamara Kronis, Nanaimo—Ladysmith

Conservative
“High fuel costs are not going away anytime soon. Steady fuel taxes help keep food prices stable. Why will the government not make this fuel tax cut permanent right now?”
Official Hansard

Madam Speaker, one of the things the member said in his remarks was that the problem is not a short-term problem and that he could see the government having to extend this again depending on the circumstances. Given the value that stability has to food prices in particular, why is the government not considering our recommendation that it should be extended right now permanently for the foreseeable future?

Brad Vis, Mission—Matsqui—Abbotsford

Conservative
“I support cutting fuel taxes, but this bill does not go far enough. Small businesses are struggling with high costs, red tape, and tariffs. The government should keep fuel taxes low for longer and cut red tape so businesses can survive.”
  • A repeated line

    “Any relief for working Canadians is good news.”

    Said 3 times by 3 members since September 22.

    Every time it was said
Official Hansard

Madam Speaker, I rise today on behalf of the hard-working small business owners in Mission—Matsqui—Abbotsford and across Canada. This is a group of Canadians that is facing more pressure than the average person. They are faced with the same stressors, such as food prices that are making it difficult to feed their families and skyrocketing rent that is consuming more of their earnings, while they are also trying to keep their businesses afloat. It is clear the government agrees with Conservatives that Canadians and small business owners cannot afford an increase in gas prices anytime soon. This is a good thing because we tried to do this a few months ago and it was rejected by the government at that time. The Liberals’ failure to deliver the economic certainty they promised has piled even more uncertainty onto small businesses, and Canadians across the board are paying the price right now. When businesses pay more to make, move and sell the things people need, these costs show up in the prices consumers pay. This is at a time when 49% of people, almost half of working Canadians, feel less financially secure than they did a year ago. Any relief for working people is good news, but a modest extension of the Liberals’ current plan will not be enough for Canadians already squeezed by higher costs. I have risen many times in this chamber since the last election, quoting studies and statistics reflecting the abysmal state of small businesses and the health of small businesses in our country. Let me give a few more examples. In April, a record high of 74% of small business owners reported fuel as an input cost causing difficulties. Nationally, seven in 10 businesses impacted by fuel cost pressures report absorbing increases through lower profits, half have increased prices charged to customers, one-third have delayed planned investments and close to one in five has cancelled investments altogether. Six in 10 small businesses cite fuel costs as one of the biggest challenges, ahead of taxes, labour and economic uncertainty. The concerns with this tax are not in isolation. They are spurred on by the affordability crisis and the trade war with the United States. Canadians have enough on their plate. A hastily reintroduced fuel tax before the end of the trade war will only harm already struggling small businesses and the people who buy from them. This is particularly true in rural communities, such as the one I represent. For example, recent changes by the Canada Border Services Agency at the Abbotsford-Huntingdon crossing are creating serious challenges for local businesses. After 8 p.m., drivers must now commute to alternate crossings, one 20 kilometres away and the other almost 40 kilometres away. Companies facing this choice certainly cannot afford to pay a reinstated excise taxes on that extra 20 to 40 kilometres next year. Why would the Liberals continue to entertain half measures when keeping fuel taxes low has proven to provide the relief Canadians need? The Business Council of British Columbia is in Ottawa this week, meeting with MPs and reinforcing a simple message, which is that we need real regulatory reform, and right now, the government is not doing enough to get rid of red tape. Under the leadership of the government, Canada, in many respects, has become hostile toward entrepreneurs. Statistics Canada documented the impacts of a 37% rise in federal regulatory restrictions between 2006 and 2021. This surge was directly associated with a 1.7 percentage point decline in GDP growth, alongside drops in business investment, productivity, employment, and the rate of new business formation. In 2000, self-employment in Canada accounted for roughly 16.1% of total employment. By 2025, that share had fallen to 12.9%, the lowest in decades. A report from the Montreal Economic Institute notes, “The decline in entrepreneurship became more pronounced after 2018, coinciding with a series of federal tax changes that raised costs and showed hostility toward entrepreneurs.” As a result of this economic hostility created by the Liberals, Canada is losing talent and capital to the United States, with 40% of established businesses considering leaving Canada, and too many of our brightest graduates leaving even before they get started. According to a TD Economics report, “graduates in mathematics, computer science, and engineering are less likely to remain in Canada than non STEM graduates, even among Canadian citizens. Doctoral [students] and graduates from highly ranked universities have the lowest retention rates, particularly in the first five years after graduation.” University of Waterloo data shows “that the highest-performing students are the most likely to leave Canada after graduation.” Among Canadian-born students, exit rates at the top of the skill distribution are roughly double those at the bottom. It is fundamental that a new grad sees Canada as more advantageous from both a tax regulatory perspective and a competitiveness perspective to start a business here or to work for a Canadian business, but over decades of federal mismanagement, we have moved away from that. At a time when Canadian businesses are already facing tariffs and uncertainty accessing U.S. markets, the last thing they need is higher domestic input costs. New estimates reveal that 53,112 businesses are directly impacted by either U.S. tariffs, Canadian countertariffs or, in some cases, both. Small businesses across Canada will bear the brunt of unjustified American tariffs, with 77% of affected exporters expecting revenue losses. While the Government of Canada responds with countervailing tariffs, it must learn from the challenges that businesses faced during previous rounds of retaliatory action. Many small businesses did not receive the support needed under earlier measures due to complicated administrative processes. The regional tariff response initiative saw an extremely low uptake, with fewer than 1% of small businesses applying and four in five being unaware that the program existed. As a result, firms most affected by tariffs and countertariffs were left without access to support. According to the CFIB, the most recently announced federal tariff support programs continued “to exclude about half of the small business community”. Earlier this month, on a call with members of Parliament—

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