Environment Minister Says Carbon Tax Will See Households Pay More on ‘Average’ Despite Rebates

Guilbeault says 'richer Canadians' will pay 'thousands of dollars more'

Prime Minister Justin Trudeau and Minister of Environment and Climate Change Steven Guilbeault hold a press conference at COP26 in Glasgow, Scotland, on Nov. 2, 2021. The Canadian Press/Sean Kilpatrick

Environment and Climate Change Minister Steven Guilbeault says the carbon tax will see Canadian households pay more on average, even after rebates, while asserting that “the average” calculation does not reflect the whole picture.

“If you do the average, yeah, it’s true, it’s going to cost more money to people, but the people who are paying are the richest among us, which is exactly how the system was designed,” he said in an interview with CTV’s Question Period, which aired on April 2.

“When you look at the details, the better off Canadians, richer Canadians, in the jurisdictions where the federal pricing system is being applied, will pay thousands of dollars more in carbon pricing.”

Guilbeault added that they had stated in the past that the rebates would help the people most in need in Canada, and “that’s exactly what the system is doing.”

On April 1, the federal government increased the carbon tax by 30 percent on the cost of fuel, from $50 to $65 per tonne. The Canadian Taxpayers Federation (CTF) estimated the jump will increase the price for consumers filling their gas tanks from 11.05 cents to 14.31 cents per litre, and the price of natural gas will go up 12 cents per cubic metre.

The April 1 federal carbon tax increase applies to Ontario, Manitoba, Alberta, Saskatchewan, Yukon, and Nunavut. In Nova Scotia, Newfoundland and Labrador, and Prince Edward Island, the tax will increase on July 1.

The federal government maintains it “does not keep any direct proceeds from pollution pricing,” according to a Nov. 22, 2022, news release.

The release said provinces that don’t meet federal stringency requirements in 2023–24 get 90 percent of the direct proceeds from the federal fuel charge returned to their residents through Climate Action Incentive payments, while the other 10 percent will be “used to support small business and Indigenous groups.” Those provinces are Ontario, Manitoba, Alberta, Saskatchewan, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island.

Guilbealt said “the rebates will help the people most in need in Canada.”

‘Most Households Will See a Net Loss’ in 2030

Meanwhile, Canada’s Parliamentary Budget Officer Yves Giroux said, “When both fiscal and economic impacts of the federal fuel charge are considered, we estimate that most households will see a net loss” even after receiving rebates, based on projections for 2030–31.

“Based on our analysis, most households will pay more in fuel charges and GST—as well as receiving slightly lower incomes—than they will receive in Climate Action Incentive payments,” he said on March 30 when announcing the release of his report, “A Distributional Analysis of the Federal Fuel Charge Under the 2030 Emissions Reduction Plan.”

“Our estimate of the economic impact captures the loss in employment and investment income that would result from the federal fuel charge,” the report noted.

However, the release added that “relative to disposable income, our estimates of household net cost of the federal fuel charge show a progressive impact that is, larger net costs for higher income households.”

An updated analysis released by the PBO later that day further explained that “the largest net cost is for households in the top income quintile in Alberta (2.7% of disposable income) and the largest net gain is for households in the lowest income quintile in Saskatchewan (2.7% of disposable income) in 2030–31.”

Under the Liberals government’s climate plan, the carbon tax, after rising to $65 per tonne starting April 1, will gradually go up by $15 every year until 2030, by which time fuel will cost $170 per tonne.

Net Cost

The PBO report estimated that by 2030, the net cost of carbon tax will hit $1,513 on average for Nova Scotian households, $1,512 in P.E.I., and $1,316 in Newfoundland and Labrador.

Alberta households will pay on average $2,773 by 2030–31, while those in Saskatchewan will pay $1,723, those in Manitoba will pay $1,490, and those in Ontario will pay $1,820.

While the lowest-income households in these provinces will benefit from several hundred dollars in rebates, all of the other income quintiles, with few exceptions, can expect to see a net loss as cost increases relative to rising income, based on the report’s calculation.

In 2018, when Trudeau announced a carbon tax on Canadians, the federal government promised that the average family would receive more in rebates than the costs from the tax, giving an example of the average family of four in Ontario.

The government said that this example family would receive roughly $300 in rebates in 2019, but only pay $240 in cost increases associated with the carbon tax.

The CTF said in a news release on March 30 that the Parliamentary Budget Officer’s report is clear. “The carbon tax costs families hundreds of dollars more every year than the rebates they get back.” It said the report “shows politicians are using magic math to sell their carbon tax.”

“It simply isn’t credible to believe the feds can raise taxes, skim some off the top for administration costs and somehow make families better off,” the release said.

Citing the PBO report, the CTF said the carbon tax will cost households on average up to $710 this year even after rebates, with the highest cost to Albertans.

Conservative Leader Pierre Poilievre said on social media on April 2: “So after lying for 5 years that ‘Canadians would be better off’ because of the carbon tax, Liberals now admit most people will pay more than they get back.”

“Let this be a lesson to all the Liberal media mouthpieces that repeated Trudeau’s disinformation on the carbon tax,” said Poilievre.

The Conservatives have said they would remove the carbon tax and lower prices if elected.

Isaac Teo contributed to this report.