Key Takeaways
Prime Minister Justin Trudeau has socked Canadians with a punishing carbon tax that, in some cases, already exceeds their monthly heating bills and continues to increase.
The tax started in 2019 at $20 per metric ton of carbon dioxide and will reach $170 by 2030, a 750% increase.
Despite the government’s promised “rebate” program, many Canadians are already losing money in the government scheme, with the rebates failing to cover losses from the embedded carbon tax.
As the carbon tax increases, more Canadians will lose household income to heat their homes, keep the lights on, and go about their daily lives.
Canadians may want to rethink Trump’s offer to make them the 51st state of the United States after they pay their heating bill. Natural gas heating has more than doubled in cost after the carbon tax was increased this winter. Heating is not the only bill that contains a carbon tax. Electricity generated by any fossil fuel and the gasoline and diesel used to propel internal combustion engines are also taxed for their carbon content under Prime Minister Trudeau’s administration. Carbon taxes also raise the costs of the goods manufactured and consumed, as energy is a foundational input in modern life. Canadians are fighting to afford the basics and are now faced with astronomical carbon taxes.
Most of the residential bills in cities and suburbs across Canada show a carbon tax costing more than $50 extra per month, with the tax typically exceeding the cost of the home heating fuel being used. A small mobile homeowner with a new furnace had a December heating bill for gas of $20 with a carbon tax of $32. In Northern Ontario, where temperatures typically drop to -20 overnight, a young mom’s household’s December gas bill showed a $134 carbon tax charge. A pub in Peterborough, Ontario, had a natural gas bill with a carbon tax charge of $1,044. Many folks who use propane for home heating do so because they live in remote locations, like rural farms or mountainsides, or are trying to save money by living in mobile homes or campers. Because they have to pay a tax on carbon in the propane, the money saved is lessened.
In Saskatchewan, Premier Scott Moe has refused to collect Ottawa’s carbon tax on home heating, which ranges from $50 to $80 per month for homeowners in the province. Homeowners in Alberta had a carbon tax added to their electric bills as Alberta’s electric power plants are fueled by natural gas, and their home heating systems are almost exclusively natural gas-based.
Moreover, a working dad of twins living in Edmonton Centre had a natural gas bill with a carbon tax totaling $136. He also had to pay a separate carbon tax on gasoline for his truck. The carbon tax adds 17 cents per liter, and he uses 200 liters per week, totaling $34 a week extra, or $1,768 per year, to pay the tax.
Trudeau’s government and the Parliamentary Budget Officer (PBO) claims Canadians will “get more back than they pay out” in the carbon tax. Yet, in three separate reports, the PBO shows that the carbon tax costs average families hundreds of dollars more yearly than what they gain from the rebates.
Canada’s Carbon Tax
The Canadian government under Prime Minister Trudeau set the initial carbon price at $20 per metric ton of carbon dioxide equivalent in 2019, increasing at $10 per metric ton to $50 in 2022, and then by $15 per metric ton between 2023 and 2030. In April 2024, the carbon price increased to $80 per metric ton of carbon dioxide equivalent and is set to increase to $170 per metric ton of carbon dioxide equivalent by 2030. The Canadian government provides an annual rebate, which increases each year along with the carbon price, to help offset the carbon tax cost. The Canadian government allows provinces to implement their own system if it aligns with the country’s minimum national stringency standards, or “benchmark” criteria. All provincial and territorial carbon pricing systems must cover the same proportion of emissions as would be covered by the federal backstop in their jurisdiction.
The Canada Carbon Rebate (formerly known as the Climate Action Incentive Payment) is a tax-free direct payment to help eligible individuals and families offset the carbon tax cost. It consists of a basic amount and a supplement for residents of small and rural communities. The amount is based on household size and income. According to PBO estimates, the carbon tax will cost the average Canadian household between $377 and $911 in fiscal year 2024-25, even after rebates, with Albertans being the most affected. As the carbon tax increases annually, the financial burden will also increase. By 2030, the average net cost of carbon tax for Canadian households will rise to $1490 in Manitoba, $1723 in Saskatchewan, $1820 in Ontario, and $2773 in Alberta.
According to a PBO report, in fiscal year 2024-25, 60 percent of households in Alberta, Ontario, Saskatchewan, Newfoundland and Labrador, Nova Scotia, Prince Edward Island (P.E.I.), and Manitoba will pay more in carbon taxes than what they receive in rebates, after accounting for both direct and indirect costs of the carbon tax. By 2030, 80 percent of households in Alberta, Ontario, Manitoba, Nova Scotia, and P.E.I. will be worse off, as will 60 percent of households in Saskatchewan and Newfoundland, and Labrador.
The PBO report also notes that due to the economic impact of the carbon tax, the federal deficit will increase by $2.3 billion in 2024-25 and by $7.1 billion in 2030-31, when the carbon tax reaches $170 per metric ton.
Conclusion
The Trudeau administration instituted a carbon tax beginning in 2019 at $20 per metric ton of carbon dioxide, increasing to $170 per metric ton by 2030, a 750% increase. In April 2024, the tax was at $80 a metric ton, and households found that the carbon tax was more costly than the cost of their natural gas used for home heating. While there is a rebate program, not everyone is entitled to it, and most households still receive a negative net payment. Canadians also pay the carbon tax on electricity generated by fossil fuels and the gasoline and diesel used to run their vehicles. As the carbon tax increases, more Canadians will lose household income to heat their homes, keep the lights on, and go about their daily lives.
