Canada braces for an increase in gas prices.

Tax changes are coming to Canada in 2025, including a hike in the federal carbon tax, a move that continues to stir debate.

Starting April 1, the carbon tax will increase from $80 per tonne to $95 per tonne, as reported by the Canadian Taxpayers Federation. This will translate to 20.9 cents per litre of gasoline, up from the current 17.6 cents.

According to the federation, this means a typical 70-litre minivan refuel will cost families an additional $14.64 due to the carbon tax.

While the federal government emphasizes that most Canadians receive rebates exceeding their carbon tax contributions, a report from the Parliamentary Budget Officer paints a different picture. The report indicates that, even after rebates, the tax will cost the average household between $133 and $477 in the 2025-26 fiscal year.

Additionally, the federation highlighted the government’s practice of charging GST on top of the carbon tax, describing it as a “tax-on-tax” that will cost Canadians an estimated $500 million in 2025-26. Unlike the carbon tax itself, this additional cost is not rebated.

The carbon tax is set to rise annually, reaching $170 per tonne by 2030.

Compounding the issue, a weak Canadian dollar is also contributing to higher fuel prices at the pump.