What the gas tax cut means for you in Ontario

The Ford government announced last week that it is making a cut to the provincial gas tax permanent.

The announcement was made at a press conference where Premier Doug Ford also said that tolls will be removed from the provincially owned portion of Highway 407 as of June 1, making that section of the highway free to use for drivers.

READ MORE: This part of Highway 407 will soon be free for drivers in Ontario

“I know that families and business owners are worried about rising costs, especially as U.S. tariffs threaten to raise the price of everyday essentials,” Ford said in a news release last Tuesday.

“That’s why we’re cutting the gas tax permanently and taking tolls off Highway 407 East, and that’s why we’ll always keep looking for ways to put more money back into the pockets of Ontario families.”

What the gas tax cut means for your wallet

The price at the pumps is made up of the cost of oil, wholesale margins, retail margins, federal excise tax, the Ontario gasoline / fuel tax, and HST, the government noted.

After taking office, Prime Minister Mark Carney set the federal consumer carbon price to zero as of April 1, which resulted in a big drop in prices at the pumps.

The Ford government first implemented a temporary cut to provincial gas and diesel taxes on July 1, 2022.

The gasoline cut amounted to 5.7 cents per litre and the diesel rate was cut by 5.3 cents per litre.

It has been extended four times.

“The latest of these extensions is set to end on June 30, 2025, providing families and individuals with $1.7 billion in gas and fuel tax relief since the cuts began,” the Ontario budget released last Thursday said.

But now, the cuts are set to become permanent as of July 1.

The provincial tax isn’t at zero, however.

The rates stand at nine cents per litre.

The government said that continuing the 5.7-cent gasoline tax cut and the 5.3-cent diesel tax cut will save Ontario households on average $115 per year going forward, with prices at the pumps lower than they would have been if the cuts were to expire.

The change doesn’t apply to leaded gasoline or aviation fuel.

Stephen Laskowski, the president and CEO of the Ontario Trucking Association, said in the provincial news release that fuel is typically the second biggest cost for the trucking industry behind labour.

“Essentially every item or product Ontarians have at home, or their places of business, was moved by truck,” Laskowski said.

“This announcement helps fight inflation and assists trucking companies dealing with cash flow challenges during the tariff war with the United States,” he added.

Meanwhile, the province said that while it “welcomes the federal decision to set the carbon tax rate to zero effective April 1, 2025, it continues to call for the complete repeal and elimination of the carbon tax.”