The Niagara Independent, April 2 & 9, 2021 – The federal government once again hiked the carbon tax on April 1st as per its publicized schedule of annual tax increases. Recall this time last year, during the height of the pandemic crisis, Canada made international headlines as the only country that was hiking taxes while the global economy was shut down.
PM Justin Trudeau and the governing Liberals are wholly committed to the carbon tax. The Conservative Party has announced it is opposed to the tax. So, it appears, Canadians will get a chance to vote on the carbon tax regime in the next election.
The Trudeau Liberals argue that taxing pollution is an essential component of the country’s environmental commitment and the PM has stated ad nauseum that this carbon tax is revenue neutral. Conservatives point out that both these claims are false: a tax does not constitute a serious environment policy and this carbon tax is nothing but a tax grab. Organizations from the Canadian Chamber of Commerce, to Canadians for Affordable Energy, to the Canadian Taxpayers’ Federation (CTF) have been similarly critical, stating this carbon tax regime is adversely impacting Canadians.
On Thursday the federal carbon tax increased by $10 to $40 per tonne, which increases pump prices by approximately nine cents per litre according to the Canada Revenue Agency. It also raised Canadians’ cost of heating their homes (although the CRA have not provided the exact figures for these increased bills).
The bottom line is that the Liberals’ carbon tax hikes are going to raise the cost of everything for Canadians. According to the government’s own schedule of tax hikes, taxes paid at the pump on each fill-up by 2030 will be an additional $27 for a minivan, an additional $45 extra for a pickup truck, and truck drivers will pay an additional $204 to fuel their tractor trailers. Consider what this means for commuters each week.
Canadians will also experience increased taxes on their home heating, natural gas and propane bills. One estimate from the CTF factored that a home using 2,700 cubic metres of natural gas per year would be dinged an extra $240 in taxes each year.
This tax will hit farmers and truckers hard and Canadians will experience hidden tax increases with groceries and merchandise bills. It will be difficult to factor and track these tax increases as they will be unseen, folded into the cost of goods.
There is also the additional GST that is collected on all of this tax. The federal government is taxing the carbon tax. The CTF estimates, in 2019, Ontarians alone paid $243 million in GST on top of carbon tax charges.
These tax increases are only a third of the story when it comes to the Liberal Government’s tax grab. The government has announced a three-prong carbon tax regime: 1) the scheduled carbon tax hikes; 2) a new Clean Fuel Standard (CFS) carbon tax on the country’s business community to take affect January 1, 2022; and 3) multiple green measures and subsidy programs that are estimated to cost Canadians $15 billion in the short term.
With the yet-to-be-imposed CFS tax, the federal government estimates this new tax will increase energy costs by an additional $208 annually for households by 2030. There is no CFS rebate system planned to defray these increased taxes.
Add all the carbon taxes up and the average Canadian will be paying north of a thousand dollars in additional taxes each year. And perhaps much more according to the Environment Minister Jonathan Wilkinson. On the news that the Supreme Court of Canada ruled in favour of the federal government’s right to impose the carbon tax, a delighted Minister Wilkinson told CBC News that the next step for the country will be to set new emission targets that will exceed the targets stated under the Paris Agreement. One can assume from this statement that the schedule of Liberal carbon tax hikes will be recalculated and – hiked.
In a fall government document on their environmental agenda, the Liberals explained the rationale for their carbon tax. The document states: “The principle is straightforward: a carbon price establishes how much businesses and households need to pay for their pollution. The higher the price, the greater the incentive to pollute less, conserve energy and invest in low-carbon solutions.” By taxing Canadians increasing amounts, the government intends on meeting its emissions targets. (Yet this strategy is questionable given Canada’s emission levels have notably increased since the imposition of the carbon tax.)
Conservative Leader Erin O’Toole vehemently disagrees with this approach of taxing Canadians and has promised to provide a viable alternative to meeting Canada’s emission targets. O’Toole states, “We’re in the process of creating a very comprehensive plan that will reduce emissions without some of the negative aspects of Mr. Trudeau’s Ottawa-imposed carbon tax.” O’Toole explains the Liberal carbon tax “will hurt some of the people at the margins, will hurt small businesses who cannot be made whole for the cost, and will hurt some of our cross-border opportunities because there is no carbon price in the United States.” O’Toole adds, “It’s not a market-based approach if our largest competitor does not have the input price for carbon.”
O’Toole explains the Conservative approach to scrap the carbon tax is not denying Canada’s role in contributing to global warming solutions, “Climate change is real and it’s important for us to have a serious approach. I want to have a plan that Canada can meet its targets. I’ve also said I’d like to see a net-zero approach plan, a made-in-Canada net-zero approach plan over the longer term, which is the 2050 timeline, but to do it without taxing people. As I said the carbon tax impacts our competitiveness and it hurts people in the margins the most. I think it’s backwards to be honest.”
Current public opinion suggests that one in two Canadians agree with the Conservative Leader. A recent Leger research poll indicates 52 per cent of Canadians do not support annual carbon tax hikes. One in three (32 per cent) are in favour, and the balance (16 per cent) are undecided. More than two-thirds do not like the tax increases at the pumps (68 per cent) or on home fuel (67 per cent); half (49 per cent) do not like the fact that Canadian businesses are being taxed extra; and half (49 per cent) do not believe the carbon tax is revenue neutral.
When Canadians already are spending considerably more of their income on taxes than on life necessities, to insist on a schedule of increased carbon taxes may be too much to ask. For a growing number of tax-weary Canadians, the upcoming federal election will bring a welcomed opportunity to vote on the matter.
Prime Minister Justin Trudeau explains the carbon tax thus: “The principle is straightforward: a carbon price establishes how much businesses and households need to pay for their pollution. The higher the price, the greater the incentive to pollute less, conserve energy and invest in low-carbon solutions.”
Since the Trudeau government introduced its carbon tax, Canada has repeatedly failed to meet its carbon emissions targets.
The rationale for raising the tax is to cause greater economic pain so that Canadians will pollute less and the country will meet its emission targets. The political spin is “Canadians must pay their share to save the world.”
Yet, here are five uncomfortable truths about the carbon tax that suggests this punitive taxing approach is not only a policy failure that has zero percent chance of making any real difference with lowering emissions in Canada or around the world, but that it is an unfair tax that disadvantages both lower income Canadians and our country’s economy.
- The current tax is a proven failure to lower emissions.
Canada adopted a 2050 target of net zero emissions, but it is on course to miss the emission levels at every milestone along the way. Last year, the government reported that emissions in Canada had actually risen over the past decade from 543 to 577 million metric tonnes. The country missed its Copenhagen 2020 targets and, according to the United Nations Emissions Gap Report, the U.N. estimates Canada is set to miss its 2030 emissions target by 15 per cent.
Even with the schedule of carbon tax increases, it is questionable whether the country’s emissions will marginally decrease, let alone meet our future targets. This is one reason why Environment Minister Jonathan Wilkinson has stated the country must set more aggressive targets over the decade, presumably imposing an even more aggressive schedule of tax increases. It is also why the federal government is considering the introduction of a carbon-offset system that will allow Canadian industries to pay for maintaining their emissions levels. In both cases, our taxes will increase, while the country’s carbon emissions will not decrease in any meaningful way.
- Our country’s contribution to global greenhouse gas emissions accounts for a miniscule 1.6 per cent and our efforts to reduce carbon emissions is insignificant.
The reality is that if Canada were to eliminate all carbon emissions tomorrow, the coal plants currently being built in China would more than replace this accomplishment. (Did you know: China is building 184 coal plants and, in 2020, China built more than three times as much new coal power capacity as all the other countries in the world combined?)
Our country ranks tenth on the list of global polluters, but it is a small fraction of the world’s greatest emitters. Some 53 per cent of the world’s emissions come from four sources: China 27.2 per cent, U.S. 14.6 per cent, India 6.8 per cent, and Russia 4.7 per cent. At today’s measurements, China emits in 20 days the carbon emissions Canadians pollute in an entire year. The country may have made headlines signing onto the U.N.’s emissions program, but the Chinese government doesn’t plan to begin reducing emissions for another two decades.
- The carbon tax is unevenly applied across the country – undermining the fairness and effectiveness of the tax.
The federal carbon tax directly impacts Alberta industries and is not applied to Quebec industries. Motorists in Ontario pay a greater amount of tax at the pumps than motorists in Quebec. Residents of Newfoundland and Labrador pay no carbon tax at the pumps or on home fuel. The April 1 tax hike was not felt in provinces like Quebec because the schedule of tax hikes through the 2020’s will not bs imposed on Quebecers. The federal government states the new tax rate is factored at $40 per tonne, but Quebecers are still being taxed at a rate of less than $20 per tonne.
In theory, as explained by Trudeau, the punitive nature of continuously increasing carbon taxes will move Canadian individuals and businesses to change their behaviour and pollute less. But how is that to work if half of Canadians do not feel the pain of the turning of the screw? What are the consequences for those industries being taxed in the various parts of the country where the tax regime is not evenly applied and administered?
- The carbon tax is a greater burden on lower income Canadians, and it is not revenue neutral.
A Finance Canada analysis on the carbon tax recently concluded that “increases in transportation fuel and home heating expenses would disproportionately impact lower and middle-income households [and] those living in single detached households or those without control over the energy efficiency of their dwellings that use heating oil.”
While, an Environment Canada report concluded that the government is not fully rebating Canadians the tax dollars it collected with the carbon tax. In 2019, the government collected $2.6 billion in carbon taxes from Canadians and rebated only $2.2 billion to households, small and medium-sized businesses, and public institutions. Ontario residents were shortchanged almost $400 million. Some 40 per cent of Ontario households pay more in carbon taxes than they get back in rebates.
- The carbon tax is increasing the cost of living – and this will seriously impact all Canadians.
The carbon tax will raise the cost of everything for Canadians. It raises gas prices for commuters and personal travel. It raises fuel prices to heat homes. It increases costs for our farmers, manufacturers, miners and energy producers, and the truckers who deliver almost everything we need. In this way, the carbon tax will raise the price of all groceries and consumer goods. And, incredibly, on top of the carbon tax, the federal government also charges the GST (collecting a further tax on the carbon tax).
This week a national survey found 53 per cent of Canadians are $200 or less away from being insolvent. Thirty per cent of Canadians say they are already unable to pay their bills and manage their debt obligations – there is no money left over at the end of the month. Now, imagine Canadians paying more tax.
Former Liberal MP Dan McTeague, and now the outspoken head of the group Canadians For Affordable Energy, believes that “politicians who care about the issue of affordable energy can, and should, make the case against carbon taxes.” McTeague states the punitive tax regime “requires a pushback against the many people who insult everyday Canadians who are sick and tired of watching their taxes go up.”
In the upcoming federal election, the Trudeau Liberals will want to frame the tax as the responsible way for Canadians to do their part for global climate change. The Conservatives will want to talk about the ineffectiveness of the tax regime, promising to relay how Canadians can meet their international obligations to reduce emissions without a carbon tax. Quite apart from this political debate is the reality of what the carbon tax is costing the country as it places an increasingly difficult burden on the backs of Canadians. These issues will be debated – come the next federal election, Canadians will ultimately get to vote on the carbon tax.
Chris George is an Ottawa-based government affairs advisor and wordsmith, president of CG&A COMMUNICATIONS. Contact: ChrisG.George@gmail.com