A day after sweeping three byelections in Ontario and Quebec that gave him a majority in the House of Commons, Prime Minister Mark Carney has announced that he is temporarily removing the federal excise tax on gas and diesel.
The move means that the cost of gas will drop by ten cents on a litre of gasoline and four cents per litre of diesel starting Monday and lasting until Labour Day.
The fuel tax holiday, which Carney said would also see the four cent per litre excise tax removed on aviation fuel, is expected to cost an estimated $2.4 billion.
In a statement, the government said the move "is a responsible measure that will reduce operating costs for truckers and businesses in the food, agriculture, housing, construction, and delivery sectors."
The current national average for a litre of gas is just over 176 cents, up from just over 126 cents a litre before the United States and Israel launched their attack on Iran and oil stopped flowing through the Strait of Hormuz.
About a fifth of the world's oil transits through the strait from states in the Persian Gulf including Iran, but that passage has been all but shut by the threat of Iranian drones and mines since the conflict began.
When talks between the United States and Iran to end the war and reopen the strait failed, the U.S. announced it would begin a naval blockade of Iranian ports and attempt to reopen the straight to traffic from other countries.
That announcement saw prices dip slightly but the crisis in the strait continues and volumes have yet to resume to anywhere near the pre-war averages.
Carney expects Canada to avoid recession
Carney said the best way to respond to the "enormous shock" in the global economy created by the conflict is by tackling affordability issues at home, building more homes and accelerating the approval of large nation-building projects.
"Its absolutely clear and has been reinforced again by events in the Middle East: we have to make our economy stronger and more independent," Carney said.
Quoting Tuesday's International Monetary Fund (IMF) outlook, the prime minister said he expects Canada to avoid a recession.
"The expectation, even in the wake of one of the big economic shocks, is that Canada will be the second-strongest economy ... in the G7 this year and next," he said.
The IMF predicted Tuesday that the fastest-growing economy this year would be the U.S. at 2.3 per cent, followed by Canada at 1.5, France at 0.9, Germany and the U.K. at 0.8, Japan at 0.7 and Italy at 0.5.
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