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What is the gas tax break in Canada?

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Tax Break

The pandemic and Russia and Ukraine war have caused lots of disturbances in the world market. Canada faced the highest inflation rate of 8.1% in June. This inflation rate came as a surprise, and it had a big effect on the lives of Canadians as well. The increase in inflation has been the highest since 1983. 

Canada is a prominent supporter and is providing aid to Ukraine in the Russia and Ukraine war. This has caused significant changes in prices all over the world. Canada has also faced massive shortages in fuel and oil. People’s demand for gas, energy, and oil has increased, which has put pressure on the Canadian government. The Canadian government raised gas prices due to changes in world market prices, affecting businesses and people. Many small businesses increased their product prices due to the high cost of transportation.

What is gas tax?

A gas tax is an extra tax imposed by the government and federal government on the use of fuel. The government takes the tax so that they can use it for the transportation sector and highway infrastructure. In addition, the tax money is spent on roads, bridges, and transportation to provide citizens with improved transportation. 

The gas tax break is an initiative taken by the government to provide relief to citizens. The gas tax break is also commonly known as the gas tax holiday. In Ga Tax Break, the government temporarily stops taking taxes from the citizens to provide them with cheaper fuel and facilities. 

President Joe Biden announced a three-month gas tax holiday in the United States of America. He implemented this idea that citizens are paying around $4–$5 per gallon, which is the average calculation of the whole country, with a ban on the tax of 18.4¢ per gallon for a short period to bring down the price of fuel. President Joe Biden also instructed them not to increase taxes or fuel prices to provide gas tax relief.

The political figures very much liked and appreciated this idea. Many thought this would relieve the citizens in this era of high inflation. Furthermore, many influential figures and leaders also instructed President Justine Trudeau to follow the strategy of Joe Biden to cut the gas taxes. 

Finance Minister and Deputy Finance Minister Chrystia Freeland stated in her speech that “the situation in Canada is a little different than in the United States of America.” However, she did hint in her speech that they are working to provide Canadians with more affordability and a cheap cost of living, so the gas tax break is on the table. 

Still, at 8.1% in June, Canada had one of the highest inflation rates, which messed up the whole economy. Businesses have increased the price of their products due to high gas prices. Citizens are demanding immediate action to reduce gas prices. 

Deputy Finance Minister Chrystia Freeland says, regarding the high inflation issue, “We’re going to watch the affordability challenges that Canadian families are facing very, very carefully. And we are prepared to do more, if necessary. “

A CBC article published on June 22, 2022, stated that the conservative party is demanding immediate relief and a cut in GST and sales tax to make living affordable again for Canadians. Low-middle-class families suffer the most from inflation and high gas tax prices. 

Freeland gave assurance and referred to the Federal Budget Plan 2022, “Affordability Plan,” which is around 8.9 billion dollars for supporting Canadians. 


The global pandemic and the Russia and Ukraine wars have caused lots of disturbances in the world economy. Gas prices have reached their peak in Canada, and the prices keep increasing even more all over the world. The United States of America has introduced a new strategy to decrease the burden on Americans by providing a gas tax break. It is a temporary relief given to citizens. Due to high inflation and an affordability crisis, Canada is also thinking of following up with this strategy. They are focusing more on the “affordability plan,” which was presented in the federal budget for 2022. 

Salman Rundhawa
Salman Rundhawa
Salman Rundhawa is the founder of Filing Taxes. Salman provides valuable tax planning, accounting, and income tax preparation services in Toronto, Mississauga, Oakville, and Hamilton.

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