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EDITORIAL: Most who pay carbon tax worse off — PBO

Petro-Canada gas station, 9936 109 St., in downtown Edmonton, Thursday March 31, 2022.
Petro-Canada gas station, 9936 109 St., in downtown Edmonton, Thursday March 31, 2022. Photo by David Bloom /Postmedia Network

Canada’s parliamentary budget officer says the average family in the seven provinces where Prime Minister Justin Trudeau’s carbon tax now applies will pay hundreds of dollars more in carbon taxes this year than they get back in rebates.

With Trudeau’s carbon tax increasing by 30% to $65 per tonne of greenhouse gas emissions from $50 per tonne on April 1, Yves Giroux reported Thursday that:

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“When both fiscal and economic impacts of the federal fuel charge are considered, we estimate that most households will see a net loss, paying more in fuel charges and GST as well as receiving lower incomes, compared to the climate action incentive payments they receive and lower personal income taxes they pay.”

Giroux estimates the net cost for an average household in Ontario this year will be $478, rising annually to $1,820 in 2030 when the carbon tax hits $170 per tonne.

For Alberta, $710 this year, $2,773 in 2030; for Saskatchewan, $410 this year, $1,723 in 2030; for Manitoba, $386 this year, $1,490 in 2030; for Nova Scotia, $431 this year, $1,513 in 2030; for Newfoundland & Labrador, $347 this year, $1,316 in 2030; for P.E.I., $465 this year, $1,521 in 2030.

Giroux said when only the fiscal impact of the carbon tax is considered, most households end up better off financially, but when the negative economic impact of the tax is factored in, most are worse off.

Giroux said the carbon tax is progressive because while the average household pays more in carbon taxes than they receive in rebates, this applies to the 60% of families with higher incomes. The 40% with lower incomes receive more in rebates than they pay.

The maximum benefit for households with the lowest incomes in Ontario will be $241 this year, rising to $408 in 2030; $440 in Alberta this year, $592 in 2030; $623 in Saskatchewan this year, $1,036 in 2030; $368 in Manitoba this year, $688 in 2030; $108 in Nova Scotia this year, $226 in 2030; $274 in Newfoundland & Labrador this year, $689 in 2030 and $167 in P.E.I. this year, $449 in 2030.

While money raised by the carbon tax is returned to the provinces, Ottawa keeps the GST paid on it, increasing federal revenue by $429 million this year.