Province suspends provincial fuel tax to ease cost of living
Islanders will pay less at the pump starting September 26, 2026, as the Government of PEI suspends the tax on gasoline and diesel.
Premier Rob Lantz announced today that the provincial fuel tax will be suspended until January 31, 2027, removing 8.47 cents per litre from the price of gasoline and 14.15 cents per litre from the price of diesel.
The tax will return at 50 per cent of its current rate from Feb. 1,2027 until March 31, 2027, and be fully restored on April 1, 2027. A driver with a mid-sized vehicle who fills up once a week will save about $115 over the six-month period.
“We can’t control world oil prices, but we can control the tax Islanders pay on fuel, and today we’re taking action. Islanders and local businesses feel the cost of living every time they fill up. This is relief people will notice right away, at the pump, every week. It’s action for Islanders, and action for the businesses that keep our economy moving.”
- Premier Rob Lantz
The savings are largest on diesel, which powers the trucks, snow removal equipment, delivery vehicles and farm equipment that Island businesses rely on every day. For businesses that move goods, serve customers across the province or run diesel equipment, the suspension means real savings on one of their biggest operating costs.
“Fuel costs touch almost everything on our Island, from the commute to work to the price of goods delivered to store shelves,” said Jill Burridge, Minister of Finance and Affordability. “Global markets are driving prices up, and Islanders shouldn’t have to face that alone. Suspending this tax puts money back in pockets of drivers and provides meaningful relief at a time when they need it.”
Under the Gasoline Tax Act and Regulations, provincial fuel tax applies to purchases of gasoline and diesel oil; no tax is levied on home heating oil.
The fuel tax suspension is part of the government's broader action on affordability, building on the Island Essentials Benefit, the PEI Child Benefit, and income tax reductions for Islanders and businesses.
BACKGROUNDER:
- The current provincial fuel tax rate is 8.47 cents per litre on gasoline and 14.15 cents per litre on diesel.
- The provincial fuel tax rate on gasoline and diesel will be 0 cents per litre from Sept. 26, 2026, to Jan. 31, 2027.
- From Feb. 1 to March 31, 2027, the provincial fuel tax rate will be 4.24 cents per litre on gasoline and 7.08 cents per litre on diesel.
The provincial fuel tax rate has not changed since Jan. 1, 2020, when it was reduced from 9.68 to 8.47 cents per litre on gasoline, and from 15.83 to 14.15 cents per litre on diesel.
Media contact:
Janice Fogarty
Department of Finance and Affordability
jefogarty@gov.pe.ca