Freeland, Gould Reveal Carbon Tax Stance as Liberal Leadership Contest Gets Underway

Liberal MPs and leadership contenders Chrystia Freeland (L) and Karina Gould. The Canadian Press

Liberal leadership contenders Karina Gould and Chrystia Freeland are distancing themselves from the Liberal government’s current consumer carbon tax model.

Gould, the Government House Leader and the only current cabinet minister to run in the contest, said climate change is one of Canada’s most pressing issues but that many Canadians feel the carbon tax doesn’t reflect how they can contribute or make a difference.

A woman gasses up at a gas station in Mississauga, Ont., on Feb. 13, 2024. The Canadian Press/Christopher Katsarov

Speaking at her campaign launch press conference in Burlington, Ont., on Jan. 19, Gould said she would stop the scheduled carbon tax hike on April 1 and put the focus on the industrial sector.

“I will immediately cancel the increase on the price on pollution on April the first, and I will have programs to help Canadians make the choices they want to make—choices that can be too costly right now,” she  said.

“At the same time, industry needs to play its part. We need to make big polluters pay, and we need to ensure that we have a comprehensive national plan to fight the climate change.”

The federal fuel charge is set to rise by $15 per tonne to $95 per tonne of CO2 emissions on April 1. The hike will increase gasoline costs by about 21 cents per litre, diesel by 25 cents per litre, and natural gas by 18 cents per cubic metre. The carbon tax will cost the average Canadian household between $133 and $477 in 2025–26, even after the rebates, the Parliamentary Budget Officer said in an October 2024 report.

In her own campaign launch press conference on Jan. 19 in Toronto, former Deputy Prime Minister and Minister of Finance Freeland was asked about reports that as leader she would scrap the carbon tax and replace it with another measure.

Former Bank of Canada governor Mark Carney speaks during his Liberal leader campaign launch in Edmonton, on Jan. 16, 2025. The Canadian Press/Jason Franson

“Liberals believe in [fighting against climate change] and that is a fight that has to continue, but it is also the case that we need to get better at listening to Canadians,” she said.

“We have heard very clearly from Canadians in provinces where there is a consumer-facing price on carbon that they don’t like it. That’s something that we have to listen to.”

Freeland said that in a democracy, the government needs to listen to people, adding that, “our party hasn’t been good enough at that,” an issue she would change if she becomes leader, she said.

Former Bank of Canada governor Mark Carney, another front-runner in the leadership race, was also asked about his position on the consumer carbon tax, but said he would announce more details on that later.

“If you were going to take out the carbon tax, you should replace it with something that is at least, if not more, effective,” Carney said on Jan. 16, the day he launched his campaign in Edmonton. “Perception may be that it takes out more than the rebate provides but reality is different, and Canadians will miss that money, so you need a comprehensive approach.”

The carbon tax has been a key policy of the Trudeau government as part of its climate change regime. When asked about leadership contenders saying they may move away from the scheme, Prime Minister Justin Trudeau said he is “very proud” of his government’s record on climate change policies.

The Conservatives, who have been surging in the polls over the past year, have made turfing the carbon tax one of their main issues to campaign on, saying the tax negatively impacts the overall economy.

Liberal MP Chrystia Freeland, former minister of finance and deputy prime minister, leaves after attending a meeting of the Liberal Caucus, in West Block on Parliament Hill in Ottawa on Jan. 8, 2025. The Canadian Press/Justin Tang

Trust, Economy, Trump, and Poilievre

In her Jan. 19 press conference, Gould said the Liberal Party needs to rebuild trust.

“Canadians have lost trust in our party,” she said. The Liberal Party has been trailing in the polls over the last year, with the Conservatives holding a two-digit lead.

Gould also called for a review of her party’s proposed capital gains tax hike, citing concerns it could stifle tech innovation. Announced in Budget 2024 and passed the House in June, the measure requires companies to pay taxes on 66.7 percent of realized capital gains, up from 50 percent.

Gould also noted that she joined the party at a very young age, and said that the young members were instrumental in bringing about policies on illegalizing same-sex marriage and the legalization of marijuana.

Gould said she is resigning from her cabinet post to run in the leadership contest.

At her press conference, Freeland talked about her tenure as finance minister, saying she had brought down inflation during that time. But the main focus of her campaign has been on incoming U.S. President Donald Trump and his threat to impose 25 percent tariffs on Canadian imports.

Freeland says she is the best candidate to deal with Trump, pointing to her time as foreign affairs minister involved in NAFTA renegotiations during the first Trump presidency. She said she left the Trudeau cabinet because she and the prime minister were at odds over government spending, and she wanted the economy to be better prepared to weather any pressures from the United States.

Minister Karina Gould stands during question period in the House of Commons on Oct. 17, 2022. The Canadian Press/Sean Kilpatrick

Carney has said he will focus on the economy, and that his background as the governor of the Bank of Canada and Bank of England means he’s the right person for the job. He has also said the current Liberal government is spending too much and over-taxing the middle class.

He also said he’s the right person to deal with the Trump administration.

All three candidates have taken shots at the Conservative Party and leader Pierre Poilievre.

Freeland said Poilievre would be “weak” when dealing with a Trump administration, Gould said he would implement “dangerous cuts,” and Carney called his policies “naive and dangerous.”

The Conservatives in turn have said the Liberal leadership candidates are responsible for the policies of the current Liberal government, and that if any of them won nothing would change.

The Tories have also said the candidates have supported the carbon tax they are now trying to distance themselves from, citing their quotes on carbon pricing in the past and calling them “Carbon Tax Carney,” “Carbon Tax Chrystia,” and “Carbon Tax Karina.”

Prime Minister Justin Trudeau speaks to the media after a meeting with the President and CEO of The National Association of Manufacturers Jay Timmons in Washington on Jan. 9, 2025. The Canadian Press/AP, Jose Luis Magana

The leadership race started after Trudeau announced on Jan. 6 that he intends to resign as party leader and prime minister once a replacement is chosen. He asked the governor general to prorogue Parliament until March 24.

Other leadership contenders include Ontario Liberal MP Chandra Arya, Nova Scotia Liberal MP Jaime Battiste, and former Liberal MP Frank Baylis.

Candidates have until Jan. 23 to register and pay the $350,000 fee to enter the race.

The new leader will be chosen on March 9.