Most Households in 4 Provinces Will Incur ‘Net Loss’ From Federal Carbon Tax: PBO Report

Parliamentary Budget Officer Yves Giroux waits to appear before the Commons finance committee on Parliament Hill in Ottawa March 10, 2020. Adrian Wyld/The Canadian Press

The carbon tax imposed by the federal government will put Canadians in four provinces under financial stress, and it will only become worse in years to come, says a new report by the Parliamentary Budget Officer (PBO).

Released on March 24, the report concluded that by the time the federal carbon tax reaches $170 per tonne in 2030, most households in the three Prairie provinces and Ontario will see a “net loss” to their savings.

“Under the Government’s HEHE [A Healthy Environment and A Healthy Economy] plan, most households in Alberta, Saskatchewan, Manitoba, and Ontario will see a net loss resulting from federal carbon pricing,” said PBO Yves Giroux in a statement on March 24.

“That is, the costs they face—including the federal carbon levy, higher GST, and lower incomes—will exceed the Climate Action Incentive rebate they receive.”

In September 2021, federal taxes and rebates were mandated in the four provinces due to their refusal to implement a carbon levy on residents. The Liberals enforced the mandate through the Greenhouse Gas Pollution Pricing Act, which came into effect on June 21, 2018.

As part of the Liberals’ plan to reduce greenhouse gas emissions by 2030 to 40–45 percent lower than in 2005, the federal carbon tax will increase from the current cost of $40 a tonne to $50 a tonne on April 1. It will then rise by $15 a tonne yearly starting in 2023 until it hits $170 per tonne in 2030.

The PBO calculated that in 2021–22, each household in Alberta is expected to incur an average net loss of $507, while Saskatchewan trails at $309, followed by Manitoba and Ontario at $225 and $276 respectively.

However, by 2030–31, the amount will have spiked, with Alberta experiencing net loss averaging $2,282 per household, Saskatchewan at $1,464, Manitoba at $1,145, and Ontario at $1,461.

The report added that the household net carbon costs in Alberta are higher, on average, compared to other provinces “given that its economy is more emissions intensive.”

Giroux’s report contradicts the claims by Environment Minister Steven Guilbeault, who testified before the Commons environment committee on March 24 that most households will get more back in rebates than they pay when it comes to the carbon tax.

Guilbeault was responding to Tory MP Kyle Seeback of Dufferin-Caledon riding in Ontario, who asked if the minister had looked at the “disproportional impact” of the carbon tax on rural Canadians, after a resident gave feedback that she was having difficulty paying for propane due to the levy.

“As you know, according to the Parliamentary Budget Officer, eight out of 10 households are better off with carbon pricing,” Guilbeault said. “So it is true the richest among us in Canada do not benefit from the rebates, but eight out of ten households are better off.”

The PBO report was released at 9:15 a.m., nearly two hours before Guilbeault attended the meeting at 11:02 a.m.

It argued that the carbon levy under the HEHE plan creates a “negative economic impact” to all households of the four provinces, when economic and fiscal impacts are factored into the analysis.