Bill C-38

Canadian Fuel Affordability Act

An Act to amend the Excise Tax Act (extension of the federal fuel excise tax relief)

This enactment amends the Excise Tax Act to extend the temporary suspension of the federal fuel excise tax until January 31, 2027 and to temporarily set the excise tax rates on fuels to 50% of the regular rates for the period beginning on February 1, 2027 and ending on March 31, 2027.

Canadian Fuel Affordability Act

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, I believe I will be splitting my time with one of my colleagues.

[The Deputy Speaker, Tom Kmiec]

I will interrupt the member. To be clear, there is no splitting of time. They are all 10-minute and five-minute slots. The member is welcome to her 10 minutes, but she does not have to use all of her time.

I will let the member continue.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, like lasagna or moussaka, food prices are built in layers. Four cents of excise tax sits on top of a freight surcharge, which is layered on top of additional labelling requirements, new packaging restrictions and the cost of fertilizer, refrigeration, shipping, tariffs and taxes.

No single cost explains the whole grocery bill, but the grocery bill comes at the end of a long conveyor belt, and every additional cost placed on that belt eventually moves toward the consumer. At a time of record food bank use, when those of us who shop animatedly compare prices with each other in disbelief, when people are skipping meals to save money, we owe it to Canadians to ask what every decision we make in this place means for the cost of food.

When the Prime Minister claims, as he did in this chamber on March 25, that “Affordability is the best it has been in over a decade”, it is clear to me that he has not been to the grocery store. Food prices are now 29% higher than they were five years ago, while they rose only 9% over the previous five years. If we feel like food inflation has accelerated, that is because it has.

Bill C-38 is a very short bill that would do three things. It would extend the fuel tax holiday on gasoline, avgas and diesel until January 31, 2027; it would bring back half the normal rate from February 1 to March 31; and then it would restore the full tax on April 1, 2027.

I support this relief, but I think it should not be fleeting. The cycle of providing temporary relief, panicking at the expiry date and extending it for a few more months leaves too many businesses wondering what will happen next. Diesel prices are already extraordinarily volatile. Statistics Canada reported on September 17 that producer prices for diesel rose 9.6% in August alone and were 75% higher than a year ago. These are enormous movements in the price of an essential business input.

Now, Ottawa cannot set the world price of oil. Parliament cannot legislate peace in the Middle East or guarantee the price of a barrel of crude next spring, but when the market is unstable, there is an even greater responsibility for government to provide stability in the things that it does control. Nowhere is that more important than in food.

Agriculture and Agri-Food Canada estimates that transportation accounts for seven cents of every dollar Canadians spend on domestically produced food. The comparable figure in the United States is less than five cents. This is because Canada has longer distances, a more dispersed population and a climate that requires us to move food enormous distances, particularly through the winter. Fuel prices, therefore, have a direct relationship with the cost of feeding our country.

We see this in my home communities on Vancouver Island. Out here, people speak of planes, trains and automobiles, while in B.C., we also have seaplanes, helicopters and ferries to contend with. Much of our food arrives after travelling by truck, rail, ship or some combination of the three. There is always another transportation leg before it reaches a grocery store in Nanaimo, Ladysmith or Gabriola. The cost of diesel, therefore, enters our food system long before the produce truck arrives at the grocery store loading dock.

Farmers use diesel to fuel their equipment during planting and harvest. Ingredients travel to processors. Packaging has to be manufactured and delivered. Warehouses consume energy. Refrigerated warehouses consume even more energy. Finished products travel to distribution centres, grocery stores, restaurants and institutions.

I am chairing a national food affordability task force, and I heard about the cost of diesel at every farm, every processor and every grocer I visited this summer. High diesel costs have a cascading effect across the supply chain, and uncertainty amplifies that effect.

The Agri-Food Analytics Lab at Dalhousie University has found that diesel and grocery prices have moved remarkably closely together over the last 30 years. That does not mean diesel alone determines the price of food, but it confirms what anyone involved in the food supply chain already knows, which is that energy and transportation costs, that is, gasoline, aviation gasoline and diesel, are deeply connected to what Canadians eventually pay at the grocery store.

The Dalhousie lab has modelled what the present diesel shock could mean. If high prices persist through the winter, grocery inflation could peak between one-half and seven-tenths of a percentage point higher. A shorter-lived spike could produce an effect closer to three-tenths or four-tenths of a point. Either way, it is going to cost us. The Dalhousie analysis works the diesel and other cost shocks through contracts, inventories and the supply chain over many months and provides a solid basis for believing, as many members have said today when answering questions and in their remarks, that the government will need to extend this measure again and, very possibly, again.

We spend enormous effort in this place debating grocery prices after they have risen. We need to start thinking about affordability problems before they show up at the checkout because uncertainty and volatility have a price. Businesses protect themselves against it through shorter contracts, larger contingencies, higher working capital requirements or delayed investment. Smaller businesses generally have fewer ways to hedge their exposure and less balance sheet capacity to absorb a sudden change. Dalhousie's agri-food lab has highlighted precisely that vulnerability among smaller processors and independent distributors as one of the many explanations for why we are experiencing food inflation.

As well, there is a broader principle here that does not depend on agreement about the ultimate tax rate. If the policy objective is to hold this tax at zero while energy markets remain severely disrupted, then why do we not give businesses a horizon measured in years rather than in weeks or months? Our food costs would really benefit from that. A government faced with volatile markets should be trying to reduce uncertainty, not add another layer to it.

The Prime Minister talks a lot about the things we can control. Well, government taxation is one of those things. Not every increase in food prices has the same cause, and government cannot control all of them, but where government itself is adding cost or uncertainty, we have an obligation and an opportunity to act.

Agriculture and food businesses experience individual departmental policy decisions cumulatively. That means they pay the transportation cost, the packaging cost, the tariff, the regulatory cost, the energy cost and the tax at the same time. Each department may conclude that its individual measure may have a modest effect, but grocery costs do not stay nicely in departmental silos, and the cost of the whole is sometimes more than its parts. The final price reflects the entire supply chain and all of the policy changes along the way.

Canada will always be a country in which food travels considerable distances. Diesel and avgas are critical inputs. Temporary relief can buy time. We should use that time. Four cents a litre is only one layer in the price of food, but it is a layer entirely within Parliament's control. When diesel prices are already up 75% in a year, we should be looking for layers we can take off, not deciding when to put them back on.

I support the relief contained in Bill C-38. I would like us to go further, however, and provide the long-term certainty that lets businesses plan.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, the excise tax on gasoline has been a very high priority for the Prime Minister and the government in recognizing the issue of affordability. It is an important aspect that the government is wanting to pass. I want to extend my gratitude and recognize that we could not be passing it today without the collaboration of all members of the House of Commons. We see that the value is really for Canadians. It is a very important part of what the Prime Minister and the government as a whole have been talking about, so I want to express some appreciation for the collaboration. I think it is important to do so.

I would just like to get the member's comments about how we can do some wonderful things if in fact we want to work together to deliver for Canadians.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, I feel as though I should buy a lottery ticket. Thank you for those kind words, and thank you for the recognition that we are here today extending this relief to Canadians because Conservatives have pushed this point over and over again. It is because we continue to bring up affordability, we continue to focus on the people we serve in our communities and we continue to bring their stories to the House over and over again.

I would say that it is wonderful to work together, but I would like to see you paying—

[The Deputy Speaker, Tom Kmiec]

The member cannot speak directly to the parliamentary secretary. She has to speak through the chair to the member. The member has done it three times.

I will let her finish her comments, and then we will go back to questions and comments.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, it is very late, and I apologize for not speaking through you. I have the utmost respect for you, both as a person and as an institution.

I would say to the members opposite that the best ideas never rise to the top without debate and without listening. The government pushed a lot of things through in the spring. I would urge it to take the time to listen and to allow us to do our job as the opposition, which is to provide constructive commentary that hopefully helps the government see that it could do more. In this case, that is extending the excise tax relief more permanently.

[William Stevenson, Conservative, Yellowhead, AB]

Mr. Speaker, I listened to my colleague's wonderful speech, and I would like her to expand a bit on something. She said that a lot of what government does is control what it can control, which has a big effect. The Liberals have a $78-billion deficit and had an extra $6-billion-plus in spending after they came out with the budget, so they have controlled a lot of what they are going to spend. Meanwhile, they are kind of ignoring the extra GST and the extra oil revenues from the high prices of gas and oil, which they are consuming. This could go a lot further if they intended.

Can you expand on how the Liberals' choices are affecting our citizens?

[The Deputy Speaker, Tom Kmiec]

I know it is late, but I will remind members again not to use the word “you”.

I will not be responding, but I will let the member for Nanaimo—Ladysmith respond.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, I am glad that my colleague brought up the concept of control. One reason we want the gas tax relief extended and made permanent is so we can give businesses the chance to exercise that control themselves.

We know that farmers plan around growing seasons. I have, of course, spoken to farmers who tell me over and over again that energy costs are hampering their ability to plan. Trucking companies negotiate contracts, but their margins are so slim that they are struggling to stay afloat, and certainty around the cost of fuel for the long term would make a big difference. Grocery distributors build networks, but changing buying patterns based on volatile pricing is actually messing with inventory levels and even creating extra food waste. Processors make investments that they have to pay for over years, and uncertainty is making them blink, which is stifling innovation and further impeding productivity.

The government talks about wanting to control the things that we can control. Relieving the tax burden on a permanent basis would not only allow us to control the things that we need to control but would also allow businesses to plan.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Mr. Speaker, I appreciate your allowing me to speak to Bill C-38, the Canadian fuel affordability act.

While Canada is starting from a position of strength, the global economy is becoming increasingly uncertain. New and unjustified tariffs, trade tensions, and conflicts in the Middle East and Europe are driving up costs for households and businesses and are creating economic uncertainty here at home for all Canadians. Our government recognizes this and is taking action to help Canadians manage rising costs and navigate these global economic uncertainties. Earlier this year, we temporarily suspended the federal fuel excise tax, saving Canadians and Canadian businesses 10¢ per litre on gasoline and 11¢ per litre on leaded aviation fuel. The impact was immediate, with gasoline prices declining by 11¢ per litre on the first day of implementation. That was real relief for Canadians from coast to coast to coast.

Building on our decision earlier this month, the Minister of Finance and National Revenue announced our intention to extend that temporary suspension until January 31, 2027, and apply 50% of the regular excise tax rate from February 1 through March 31, 2027. That means that Canadians in my riding of Mississauga—Lakeshore on the shores of the great Lake Ontario would benefit with extended relief and continued cost reduction per litre for gasoline and diesel. Let me be clear: This measure would help lower costs for Canadians, including truckers and businesses in the food and agriculture, housing, construction and delivery sectors. This is another example of our government's delivering timely and meaningful relief when Canadians need it most.

By reducing pressure on gasoline and diesel prices, we would be helping Canadians manage today's challenges, while laying the foundation for longer-term growth and prosperity as we build on the strongest economy in the G7. This is just one part of a broader effort to lower costs for Canadians. It is one of the first measures our government took after assuming office. Members opposite will recall that one of the first things the Prime Minister did upon assuming office was to cancel the consumer fuel charge, helping Canadians to save money at the pump in most provinces and territories. Our government also removed the requirement for provinces and territories to have a consumer-facing carbon price as of April 1, 2025.

At the same time, our government recognizes that affordability challenges extend well beyond the cost of fuel, and that is why we have taken additional steps to put money, and more money, back into Canadians' pockets. For example, we introduced the new Canada groceries and essentials benefit. By building on the former goods and services tax credit, we are increasing the amount provided to low- and modest-income Canadians by 25% for the first five years, as of July, 2026. In addition to that, we provided a one-time payment in June, equivalent to 50% of increases in 2025-26, with an annual value of the GST credit.

Our government is responding to global challenges with a responsible and pragmatic fiscal approach. It is important to note that while we may not control every global event, with respect to the ones that are impacting prices, I want to assure my hon. colleagues and all Canadians that our government is doing what is necessary to take and make a deal that helps those impacts. By lowering costs for Canadians from coast to coast to coast, the government is providing supports to their affordability challenge while creating an economy where Canadians have more control in building their own future. Above all, these government measures will empower Canadians to get ahead and minimize the impacts on their cost of living.

Canadians naturally want to keep more of the money they earn. They want greater opportunities to support their families, invest in their communities and build their future with confidence. Our country is at a crossroads. Many people around the world choose Canada. New Canadians are seeking freedom and opportunity. Throughout history, Canadians have proven themselves to be resilient, to overcome adversity, and over the years, they have grown more prosperous. They will continue to build. We will persevere, more united than ever, to protect our sovereignty and strengthen its resolve. Standing together, we are navigating this crossroads.

I returned recently from overseas, and I had witnessed many around the world celebrating Canada's standing. The Prime Minister is sought after for his leadership and experience, just as much as Canada is sought after for its critical minerals and untapped potential. Canada is valued as a trusted partner that abides by the rule of law and social justice.

As chair of the defence committee, I can attest that boosting Canada's defence industrial strategy is renewing our confidence while stimulating our economy. More than that, it bolsters our national pride. Events recently, such as the major attraction at the investment summit, speak volumes. They will enable major projects and build our economy, which sustains and supports the social programs Canadians rely on and expect. Just as the EU and so many around the world welcome Canada, we welcome every effort to broaden our reach and foster relations to reduce geopolitical threats that have impacted price challenges here at home.

This bill would help support Canadians, and I hope my colleagues will support this measure for the greater benefit of all Canadians.

[William Stevenson, Conservative, Yellowhead, AB]

Mr. Speaker, I have to comment on the member opposite's speech. I felt as though I was listening to a radio. He has a great radio voice. I actually was captivated by some of his comments. In one of them, he said he has just returned from overseas. I would like to ask whether any of the countries he visited were actually oil-producing countries that were taxing their citizens on the fuel they have, compared to importing it. These other countries, I am assuming, were actually importing all their oil and not benefiting from oil they have in their own country.

Does any other country you visited actually have a fuel excise tax for its citizens?

[The Deputy Speaker, Tom Kmiec]

Just before I let the member for Mississauga—Lakeshore respond, I will give the umpteenth reminder that members should speak through the Chair and not use “you”. Even if the member prefaces it by saying “through the Chair” and then kind of wanders over to different ideas, they still have to go back to not using “you”.

I invite the member from member for Mississauga—Lakeshore to respond.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Mr. Speaker, the hon. member makes reference to excise taxes in other parts of the world. Most European countries, which is where I was, actually do have excise taxes on their fuel. In fact, fuel was much more expensive than it is here at home in Canada. More importantly than that, the countries I was in were also harnessing renewable energy. They are at the forefront of some of the most critical measures to foster wind power and solar power. They are relying so much more on other energy sources. To answer the member's question, they in fact have very high excise taxes on their fuel.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I am perhaps asking the hon. member for Mississauga—Lakeshore to turn back and reflect on some of his previous background. I think he was the minister of finance in the government of the province that did the most to reduce greenhouse gases when the province of Ontario shut down its coal-fired power plants. I think he may know something about reducing pollution and saving lives, reducing greenhouse gases while also saving people money in that province.

I wonder if he has any reflections. I am disappointed that all we would be doing is a temporary relief on an excise fuel tax instead of taxing major oil and gas companies on the excess profits they are receiving right now, but perhaps the former minister of finance has some thoughts.