OTTAWA: More than 155,000 public sector workers in Canada began a strike on Wednesday after failing to reach a wage deal with the federal government by a Tuesday deadline, in action that will affect tax filings and passport services during peak demand.

The Public Service Alliance of Canada (PSAC) union said contract negotiations would continue even as it called for its members working for the Treasury Board and Canada Revenue Agency to begin strike action from midnight.

"We truly hoped we wouldn't be forced to take strike action, but we've exhausted every other avenue to reach a fair contract for Canada's federal public service workers," PSAC president Chris Aylward said.

The union, which has been in collective bargaining for a new contract since 2021, had set a deadline of 9 p.m. (0100 GMT on Wednesday) for a deal.

"We are still here at the table. We will remain at the table. We will remain for as long as it takes during the strike and we will remain on strike until the government addresses our key issues at the bargaining table," Aylward said.

The PSAC said its members would form picket lines at 250 locations across the country.

The federal government said in a statement that it presented a "fair, competitive offer to the PSAC", including a 9% wage increase over three years, and that it would continue negotiations with to reach an agreement quickly.

"Even though there is a competitive deal on the table, the PSAC continues to insist on demands that are unaffordable and would severely impact the government's ability to deliver services to Canadians," the Treasury Board of Canada, which oversees public administration, said in a statement.

The contract negotiations cover two main groups of employees - 120,000 workers under the Treasury Board and more than 35,000 revenue agency workers.

Tax agency workers initially sought a pay bump of more than 30% over three years, while the other group is seeking a 13.5% pay rise over three years. Inflation peaked at 8.1% last year.

The strike will affect several federal services and could delay tax refunds since the walkout by revenue agency workers comes in the middle of the tax filing season. Passport renewals ahead of peak summer travel are also set to face delays.

The strike would also affect 65% of employees at the Canadian Grain Commission, including most inspectors of outbound grain at ports, according to the commission. Canada is a major wheat and canola exporter. (Additional reporting by Eric Beech, Dan Whitcomb and Kanjyik Ghosh; Editing by Christopher Cushing, Robert Birsel)