BUSINESS
09/20/2018 15:26 EDT | Updated 09/20/2018 15:48 EDT

Canadians Could Get Back More From Feds’ Carbon Tax Than They Pay: Study

The Liberals will likely return the revenue from a carbon tax directly to consumers.

Environment and Climate Change Minister Catherine McKenna at the BNEF Future of Energy Summit in New York, N.Y., Mon. April 9, 2018. The federal Liberals' climate change plan could put more money in consumers' pockets than it costs them, a new study says.
Bloomberg via Getty Images
Environment and Climate Change Minister Catherine McKenna at the BNEF Future of Energy Summit in New York, N.Y., Mon. April 9, 2018. The federal Liberals' climate change plan could put more money in consumers' pockets than it costs them, a new study says.

Opponents of the federal government's carbon pricing plan call it a "tax on everything," but a new report suggests it could actually be a "rebate on everything" for consumers in provinces where the tax will be implemented.

A soon-to-be-released study says people living in provinces that don't set up their own carbon pricing plan could actually get more money back from a federal carbon tax — in the form of government payments — than they would pay into it. The study concluded low-income households would benefit the most.

The research comes from Canadians for Clean Prosperity, a group that advocates for "market-based policies that generate growth while conserving our environment." The group is headed by Mark Cameron, a former policy director in the prime minister's office under Stephen Harper.

The federal Liberals are implementing a carbon pricing scheme that would apply only to provinces that don't have their own plans, with a levy of $20 per tonne of carbon in 2019, gradually rising to $50 a tonne by 2022.

The plan requires the federal government to impose a carbon tax on any province whose plan doesn't meet Ottawa's threshold. All the money received must be returned to the provinces where it was collected. The Liberals have indicated they plan to bypass the provincial governments and send the rebates directly to households.

According to estimates from the report, first obtained by the National Post and confirmed to HuffPost Canada by the group, the federal carbon tax would cost an Ontario family earning $60,000-$80,000 an extra $239 in 2019 in direct and indirect costs.

But that family would also get a federal rebate of $350, for a net profit of $111, the report estimates. As the carbon tax increases over time, so do the payouts to consumers.

Earlier on HuffPost Canada:


This is possible because the carbon tax will be charged not only on consumers, but on businesses as well. The study assumes that the federal government will rebate consumers primarily, with only some of the rebate going to large industrial polluters.

The cost of a carbon tax would be larger in Alberta and Saskatchewan, where more energy is generated from fossil fuels, but the rebates would be larger as well, the study found.

A family earning $60,000-$80,000 would pay $322 extra in Alberta and $332 extra in Saskatchewan in 2019, but the estimated rebate per household would be $868 and $1,075, respectively.

By 2022, the payouts would reach $822 in Ontario, $1,890 in Alberta and $2,394 in Saskatchewan.

Opposition to carbon tax takes form

Provinces that have their own carbon taxes or cap-and-trade plans will be exempt from the federal plan, so long as their own plans result in an equal or higher price on carbon than the federal plan.

Four provinces had already set up their own carbon pricing schemes Alberta, British Columbia, Ontario and Quebec.

But Ontario Premier Doug Ford is pulling the province out of the cap-and-trade system it's involved in with Quebec and California, and Alberta Premier Rachel Notley recently indicated her government won't co-operate with the federal carbon tax scheme, in protest over delays to the construction of the Trans Mountain pipeline extension.

Ontario recently launched a court challenge to the federal carbon law. Saskatchewan has asked its provincial Court of Appeal to rule on whether the federal carbon plan would be constitutional.

Steve Russell via Getty Images
Ontario Premier Doug Ford, seen here in the Legislative Assembly on Sept. 17, has launched a constitutional challenge of the federal government's carbon tax plan.

Environment and Climate Change Minister Catherine McKenna's office is currently reviewing provinces' carbon schemes to see if they meet the federal standards, and the department plans to unveil the details of its carbon plan this fall.

The Conservative Party under leader Andrew Scheer is adamantly opposed to a carbon tax.

Scheer has said he will deliver a plan that will allow Canada to meet its climate targets under the Paris accord (a 30-per-cent reduction in carbon emissions by 2030, from 2005 levels) without imposing a carbon tax.

— With a file from Althia Raj, HuffPost Canada