The political firestorm in Canada to “Axe the Tax” appears to be aimed at repeal of the carbon pricing policy of the Trudeau government. The 20% of Canadians for whom the tax free Climate Action Incentive Payment (CAIP), as a carbon tax rebate, is less than the amount they will spend in carbon taxes may require a change in lifestyle. The concept that users of more carbon pay more carbon tax is operative in Canada.
Rebate > Tax :Tax > Rebate
Mia Rabson of The Canadian Press writing in an article reported by the Financial Post addresses the question of what the increase in carbon tax could cost in some Canadian households.
Gasoline: Going from $65 per tonne to $80, means the carbon price on a litre of gasoline will now be 17.6 cents per litre, up 3.3 cents per litre from before. That means filling a 50 litre tank from empty will cost about $8.80 in carbon price, about $1.65 more than before.
Diesel: As of today the price for a litre of diesel will include 21.39 cents in carbon price, up from 17.38 cents.
Propane: The price for propane will now include 12.38 cents a litre in carbon price, up from 10.08 cents. A standard 20-pound barbecue propane tank will cost about $2.20 in carbon price to fill, compared with $1.78 over the last year.
Natural gas: On average in Canada, households use about 2,280 cubic metres of natural gas in a year, mostly for heat. At $80 per tonne, the carbon price will add 15.3 cents to a cubic metre of natural gas, up from 12.4 cents previously. That amounts to an annual carbon price bill for natural gas of about $347 on average, compared with $282 over the last year.
Food and clothing and other goods: There are indirect costs of carbon pricing, as companies that pay the price themselves increase the cost of their goods and services to keep pace. The amounts vary by industry, but Statistics Canada estimated that carbon pricing increased the price of food by about 0.3 per cent and the price of clothes by two per cent since its inception. The effect of the latest increase has yet to be determined. (Rabson, 2017)
The price increase summary by the Financial Post shows that driving fuel efficient cars and trucks, perhaps EV’s or Hybrids, and electrifying with heat pumps will reduce the carbon tax assessment for the one in five not receiving a rebate.
Building large homes and flying to vacation get-a-ways are two choices that some of the 20% are encouraged to reconsider as the carbon rebate covers less of their tax burden.
Clutch, with mission is to deliver a delightful car-buying experience to Canadians, has a web page to learn more about the carbon tax rebate, including why it exists, variances among provinces, and how it can help our wallet and the planet. The one in five Canadians who have a rebate that does not cover their tax are reminded to consider the impact of provincial government policy on the levy they pay.
For example, Quebec and Nova Scotia (previously implemented) a cap-and-trade system allowing provincial (or municipal) governments to set caps for carbon emissions by industry. Companies can then buy and sell carbon credits in an open market when they are over or below the cap. Some provinces also attempted to limit the increase in fuel and heating costs through lower individual taxes on gas, oil, propane, and natural gas. This helps alleviate the financial burden on residents and puts it upon the government through lowered taxes. Carbon taxes vary between provinces because provincial governments, and to some degree, individual municipalities, can set their own carbon taxes as long as they meet the federal government's requirements. (A Quick Guide to the Carbon Tax Rebate in Canada, 2024)
Canadian economists have released an open letter to add professional knowledge to the important discussion of the role of carbon tax in reducing GHG emissions in our efforts to mitigate the effects of climate change. Five claims by carbon tax critics are addressed by presenting evidence.
Solutions for the one in five Canadians who pay more carbon tax than their Climate Action Incentive Payment (CAIP) covers may lie in decisions to decrease their transportation and heating costs and emissions.
References
A Quick Guide to the Carbon Tax Rebate in Canada. (2024, February 27). Clutch Blog. Retrieved April 2, 2024, from https://blog.clutch.ca/posts/carbon-tax-rebate-canada
Rabson, M. (2017, November 9). Carbon tax 101: What the increase could cost you and your household. The Financial Post. Retrieved April 2, 2024, from https://financialpost.com/commodities/energy/oil-gas/carbon-tax-increases-april-1-2024
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