CANADA—The cost of most things went up around 0.1 percent on April 1 due to a rise in the federal carbon tax. While the carbon tax rose 23 percent, the impact on most budgets, according to the Parliamentary Budget Office will be minimal and offset for 80 percent of families getting at least as much back in rebates as they are paying out in additional costs.
There is a lot of hype in the web-a-sphere about the carbon tax as politicians and partisan perspectives on the matter abound.
Canada has two different carbon pricing programs—one for large industrial corporations, those companies pay a price based on a share of their actual emissions, and a second consumer carbon levy which is applied to fossil fuel purchases.
That second consumer levy impacts individuals as well as small and medium-sized businesses, First Nations, and public-sector operations such as hospitals, universities, schools and municipalities.
The price change on April 1 affects the consumer levy, which applies in every province and territory except British Columbia, Quebec and Northwest Territories.
Both British Columbia and the Northwest Territories have their own, similar, charge on carbon for consumers. Although Quebec has a cap-and-trade system that is quite different, it is considered equivalent enough by Ottawa to exempt that province from the federal levy.
The consumer carbon levy is added to the price of more than 20 different fuel sources known to produce greenhouse gas emissions when burned for energy. Those include gasoline, propane, diesel and natural gas. The additional cost applied to each fuel depends on how many greenhouse gases are produced when that fuel is burned to create energy.
The variance can be considerable, as a litre of diesel produces more carbon dioxide than a litre of gasoline, the carbon price is set higher on a litre of diesel than it is on gasoline.
Going from the previous $65 per tonne to $80, will mean the carbon price on a litre of gasoline will now be 17.6 cents per litre, that’s up 3.3 cents per litre. The price for a litre of diesel will include 21.39 cents in carbon price, up from 17.38 cents—or a rise of 4.1 cents per litre.
For propane users, the price for propane will now include 12.38 cents a litre in carbon price, up from 10.08 cents—a rise of 2.3 cents per pound. Your standard 20-pound barbecue propane tank will cost about $2.20 in carbon price to fill, compared with $1.78 last year. For natural gas, the carbon price will add 15.3 cents to a cubic metre of natural gas, up from 12.4 cents previously—that’s a rise of 2.0 cents.
Just about everything will get its own little hit, including food and clothing, as there are indirect costs of carbon pricing when companies that pay the price themselves increase the cost of their goods and services to match.
Statistics Canada estimates that carbon pricing increased the price of food by about 0.3 percent and the price of clothes by two percent since its inception. The effect of the latest increase has yet to be determined but general estimates place the impact of the carbon tax on inflation at around 0.1 percent.
Provinces whose consumers pay the federal carbon price receive a federal rebate that is supposed to offset the rise in costs.
The federal rebate is deposited or mailed out four times a year and is divided among households based on family size, not by income (unlike British Columbia whose rebate is based on household income—leaving about 30 percent out of the deal).
Each year Environment and Climate Change Canada calculates the expected revenues from carbon pricing in each province, and by law, must return 90 percent of those revenues in rebates. A portion of the remaining 10 percent goes to increase rural resident rebates by 20 percent in recognition of the challenges faced by more remote consumers in changing habits. A portion of the rest goes toward helping businesses become more fuel efficient.
Critics have pointed out those programs have been tardy in their rollout, as most businesses have not received anything in the five years since carbon pricing began.
The rebates increase as the price increases, however this year many households in the the Atlantic provinces won’t see an increase in their rebates, however, as almost one-third of households in those provinces use heating oil and since October have been exempted from paying the carbon price.
The rebates vary because carbon pricing totals vary based on things like heating use and driving distances. Alberta and Saskatchewan, for example, typically use more natural gas for heat per households than in Ontario or Manitoba.
The next rebate payment is due on April 15. In Ontario, a single person household can expect a $140 rebate, while a couple will see a $210 rebate and a family of four $280. Rural residents should see 20 percent more than that amount.
