In a major win for Ontario drivers, the provincial government has rolled out two cost-saving measures effective in 2025.
These initiatives aim to reduce financial strain amid rising costs and U.S. trade tensions.
Amid rising economic pressures from the ongoing Canada-U.S. trade war, Ontario has announced a bold plan to permanently cut gas and fuel taxes while eliminating tolls on the provincially owned section of Highway 407 East, effective June 1, 2025.
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Ontario’s New Cost-Saving Measures
On May 13, 2025, the Ford government unveiled a significant initiative as part of its 2025 budget, set to be introduced on May 15.
The plan includes two major moves: making the temporary gas and fuel tax cuts permanent and removing tolls from the eastern section of Highway 407, a provincially owned stretch spanning from Brock Road in Pickering to Highway 35/115 in Clarington.
These steps aim to alleviate financial burdens on Ontario households and businesses amid economic uncertainty driven by U.S. tariffs.
Premier Doug Ford emphasized the urgency of these measures, stating, “Families and business owners are feeling the pinch from rising costs, especially with U.S. tariffs threatening to drive up the price of essentials.
By permanently cutting the gas tax and removing tolls on Highway 407 East, we’re putting more money back into the pockets of Ontarians—and we’ll keep finding ways to help.”
Details of the Permanent Gas Tax Cut
Ontario first introduced a temporary reduction in gasoline and fuel taxes on July 1, 2022, lowering the gasoline tax by 5.7 cents per litre and the diesel tax by 5.3 cents per litre.
Since then, the government has extended these cuts four times, responding to inflationary pressures and rising living costs.
Now, as part of the 2025 budget, the province is set to make these reductions permanent, locking the provincial tax rate at 9 cents per litre for both gasoline and diesel.
The price at the pump is influenced by several factors: the cost of crude oil, wholesale and retail margins, federal excise tax, provincial gasoline/fuel tax, and the Harmonized Sales Tax (HST).
By permanently reducing the provincial portion of the tax, the Ford government projects that the average Ontario household will save approximately $115 annually.
For businesses reliant on fuel, such as trucking companies, the savings could be even more substantial.
Finance Minister Peter Bethlenfalvy highlighted the broader impact of this decision, saying, “Over the past few years, Ontario families have faced higher prices on everyday goods.
With economic uncertainty caused by tariffs, we’re taking action to ease that burden and lower costs for households across the province.”
This move builds on previous efforts by the Progressive Conservative government to reduce driver-related costs, such as eliminating license plate sticker fees in 2022, which saved families $120 per year per vehicle, and freezing fees on driver’s licenses and photo cards, saving drivers an estimated $66 million over five years.
Highway 407 East Toll Removal: What It Means for Drivers
In addition to the gas tax cut, Ontario is set to eliminate tolls on the provincially owned section of Highway 407 East, a 22-kilometre stretch running from Brock Road in Pickering to Highway 35/115 in Clarington.
This change, effective June 1, 2025, fulfills an election promise made by Doug Ford in February 2025 during his campaign for re-election.
The removal of tolls on this section is expected to save daily commuters up to $7,200 annually—a significant relief for those who rely on the highway to get to work or conduct business in Durham Region.
This isn’t the first time the Ford government has removed tolls to support drivers.
In 2022, tolls were lifted from Highways 412 and 418 in Durham Region, saving drivers an estimated $68 million over five years.
The decision to make Highway 407 East toll-free marks the final stretch of provincially owned tolled highway in Ontario, aligning with Ford’s broader commitment to banning new tolls and congestion charges on provincial and municipal roadways.
However, it’s worth noting that the majority of Highway 407—spanning 108 kilometres from Burlington to Pickering—remains privately operated by 407 ETR, a company owned by a consortium including the Canada Pension Plan Investment Board (50.01%), Cintra Global S.E. (a subsidiary of Ferrovial S.A.), and AtkinsRéalis Canada Inc.
Tolls on this privately owned section are set to increase in 2025, with rates rising between 3 and 14 cents per kilometre depending on the time of day and zone, according to announcements made by 407 ETR in late 2024.
Ford has previously considered buying back the privately owned portion of Highway 407 to address chronic congestion on Ontario’s 400-series highways.
However, with an estimated cost of $35 billion to repurchase the highway—originally sold in 1999 for $3.1 billion under the Mike Harris government—the idea has been met with mixed reactions.
Critics argue that removing tolls on the public section could lead to increased traffic due to induced demand, while others, like Transport Action Ontario’s Peter Miasek, suggest that focusing on transit and compact communities would be a more sustainable solution to congestion.
Economic Context: Why Now?
The timing of these cost-saving measures is closely tied to the economic challenges facing Ontario in 2025.
The ongoing trade war with the United States, particularly under President Donald Trump’s administration, has introduced significant uncertainty.
Trump’s threats of 25% tariffs on Canadian goods have raised concerns about rising costs for essentials like food, clothing, and household items.
Although these tariffs were paused for a month in early 2025, Ford has stressed that the risk remains as long as Trump is in office.
Additionally, Ontario families have been grappling with inflation, high interest rates, and the federal carbon tax, which Ford has consistently opposed.
The gas tax cut and toll removal are part of a broader strategy to offset these pressures and provide immediate financial relief.
Since the gas tax cuts were first introduced in 2022, they have saved the average driver over $400, according to the Ontario PC Party, and the permanent reduction is expected to build on those savings.
The decision also comes at a time when Ontario is investing heavily in infrastructure.
The province has committed over $200 billion to build roads, highways, transit, and other projects, aiming to support economic growth and job creation.
However, as gridlock worsens across the Greater Toronto Area, the debate over how to manage traffic—whether through toll removals, highway expansions, or transit investments—remains contentious.
How These Changes Benefit Ontario Families
For Ontario drivers, the permanent gas tax cut and Highway 407 East toll removal offer tangible financial benefits.
The $115 annual savings from the gas tax reduction may seem modest, but for families with multiple vehicles or businesses with fleets, the savings add up quickly.
Meanwhile, the $7,200 annual savings for daily commuters on Highway 407 East is a game-changer, particularly for those in Durham Region who have long called for the removal of tolls on this stretch.
Local leaders in Durham, including the mayors of Pickering, Clarington, and Oshawa, endorsed Ford’s plan during his campaign, with Pickering Mayor Kevin Ashe noting, “Premier Ford’s leadership is exactly what Ontario needs as we navigate complex challenges, like the tariff dispute with the United States.”
Whitby Council has also repeatedly advocated for the toll removal, passing motions in March and December 2024 to expedite the process.
Beyond immediate savings, these measures align with the Ford government’s broader affordability agenda.
Since 2018, the province has implemented several driver-friendly policies, including ending the Drive Clean program (saving drivers $40 million annually) and banning new tolls on provincial highways.
Ford’s pledge to ban congestion charges further underscores his commitment to keeping costs down for drivers, though critics argue that this approach may undermine efforts to reduce car dependency and address climate change.
Ontario’s decision to permanently cut gas and fuel taxes and remove tolls from Highway 407 East reflects a targeted effort to support families and businesses during a challenging economic period.
With U.S. tariffs looming, inflation persisting, and gridlock worsening, the Ford government is prioritizing immediate financial relief for drivers.
While the $115 annual savings from the gas tax cut and the $7,200 savings for Highway 407 East commuters are significant, the broader debate over how to balance affordability, infrastructure, and sustainability continues.
As these changes take effect, Ontarians can expect more money in their pockets—but the long-term impact on traffic, the environment, and the province’s fiscal health remains to be seen.
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