Businesses welcome federal fuel tax relief as Iran war uncertainty lingers

HALIFAX — An eastern Canadian logistics, trucking and courier company with a fleet of more than 200 vehicles says Monday’s federal tax break on fuel should provide relief to hard-hit customers.

Karanjeet Singh, owner of Dartmouth, N.S.-based NovaExpress, said his company’s fuel bill has doubled since the war in Iran began spiking prices. The company previously offered some clients all-in-one rates, but uncertainty has meant he has had to add a surcharge that changes with the price at the pumps.

Set weekly by the Freight Carriers Association of Canada, the surcharge has now reached more than 90 per cent of the base shipping cost.

“Everybody just cannot pass (on the price increases) easily, we get pushback,” Singh, whose company delivers from Ontario to Newfoundland and Labrador and into the U.S., said in an interview Sunday.

“We have a couple local small businesses … and they are shocked with this fuel surcharge now. They say it’s double now, almost. And I tell them that diesel is almost double now. Some clients we were doing, let’s say, a $20 flat rate. And now I’m going back, revisiting that and telling them that with the market inconsistency I don’t want to give an all-inclusive rate to anyone.”

The price of oil has surged in recent weeks after Iran responded to attacks from the United States and Israel by shuttering the Strait of Hormuz, where a fifth of the world’s fuel normally transits. Global oil prices tumbled more than 10 per cent early Friday after Iran said that the Strait of Hormuz was fully open. However, the U.S. continued its blockade on ships heading to and from Iranian ports over the weekend and Iran resumed its own restrictions in the strait, leaving hundreds of vessels waiting on either end. Talks between the U.S. and Iran are scheduled to resume Monday in Pakistan.

On Monday the Canadian government plans to temporarily suspend the federal excise tax on fuel, which is expected to drop gasoline prices by 10 cents per litre and the cost of diesel by four cents per litre. The reductions will remain in place until Sept. 7.

Singh says the federal tax break should help clients quickly, as changes in the global oil price can take time to work through the system. He says the full impact of fuel spikes have yet to hit retail shelves, but consumers will likely see them soon.

Dan Kelly, president of the Canadian Federation of Independent Business, said from the pandemic, to rampant inflation, to the trade war with the U.S. and now skyrocketing fuel prices, a lot of small businesses haven’t had a normal month of sales in six years. He said many are at their breaking point.

“About two-thirds of businesses are eating the costs of rising fuel prices,” he said in an interview Sunday. “About a third of businesses are starting to pass these on through their consumer pricing … As we all know, a business can’t (eat costs) forever. If they did, they would soon be out of business.”

Kelly said the price increases tend to vary depending on how much fuel factors into a company’s operations. It’s fairly obvious how sectors like transportation and manufacturing would be impacted, but even something like a pizza restaurant can be harmed when the price spikes for natural gas used in their ovens, he said.

“If you’re a service business and you’re getting hit by this in a smaller way, with fuel representing say five per cent of your overall cost picture, then you may be able to withstand a bigger shock,” said Kelly.

He said the federal fuel tax cut is a good start, but it would also like to see more provinces chip in. Kelly points to the Ontario government’s decision to cut the provincial gas tax last year as a positive example.

Kelly would also like to see a permanent end to the tax-on-tax situation at fuel pumps, where GST or HST is charged on top of fuel prices that already include other taxes. He said there may also be some benefit to putting the industrial carbon tax on holiday as well.

This report by The Canadian Press was first published April 19, 2026.

– With files from The Associated Press.

Devin Stevens, The Canadian Press