Davis Legree

Reporter

Canada’s premiers are putting on a full-court press in an effort to persuade Prime Minister Justin Trudeau to pause a scheduled increase to the federal carbon tax.

On April 1, the price per tonne of carbon dioxide equivalent will jump from $65 to $80, meaning residents of provinces using the federal carbon pricing system (everywhere but B.C. and Quebec) can expect to pay slightly higher prices for polluting fuels like gasoline, natural gas, and propane at the start of next month.

Amidst an ongoing cost of living crisis, provincial governments have one-by-one called on the Liberal government to stop the increase, which they say will only exacerbate pre-existing affordability concerns.

But the feds emphasize that most Canadian households are actually financially benefitting from the policy as a result of the corresponding carbon rebate program, which is also set to increase in April.

As carbon pricing continues to dominate the Canadian political landscape, 

 has everything you need to know about the upcoming increase, as well as the efforts of premiers and Conservative Leader Pierre Poilievre to “spike the hike.”

In less than three weeks, the price of one tonne of CO2 will rise 23 per cent to $80. But what exactly does that mean?

In this case, the price of carbon is not referring to the cost of physically purchasing CO2, but rather a fee for using fuels that produce the greenhouse gas. For example, burning one litre of gasoline in your vehicle 

 about 2.3 kilograms (0.0023 tonnes) of CO2. As such, the price of gasoline will become higher to reflect the increased cost associated with producing and emitting carbon.

According to government figures, the carbon tax on gasoline is set to increase from 14.31 cents per litre to 17.61 cents, meaning Canadians can expect to pay 3.3 cents more at the pump after April 1 than they would have previously.

A similar jump will be observed in the price of natural gas, which will increase from 12.39 cents per cubic metre to 15.35 cents. For context, the 

 on natural gas uses between 1,900 and 3,100 cubic metres of the fuel every year, meaning some households could be required to pay an additional $91.76 in carbon taxes on natural gas alone over the next 12 months.

It should be noted it’s not just individuals who will face higher prices, as stereotypically industrial fuels like ethane (used to produce feedstock), naphtha (used in laundry soaps), and aviation gas will also become more expensive in April.

The increased tax will stay in place for a year until the price of carbon jumps again on April 1, 2025, when it will rise to $95. The spike will be an annual tradition until 2030, when the tax will hit its ceiling of $170 per tonne and gasoline will be 23 cents more expensive than it is currently.

Conservatives planning opposition day motions on carbon tax hike

However, all of that is dependent on the federal carbon pricing scheme remaining in place until the end of the decade, an unlikely scenario should Poilievre, who has vowed to immediately repeal the tax, and the Conservatives form government after the next election.

Not only is the carbon tax set to be increased on April 1, but the recently rebranded rebate program that directs the collected money back to Canadians will jump in unison. Government officials have said the tax and rebate will be hiked in accordance with each other to ensure the policy both remains revenue neutral for the government and that 80 per cent of families continue to receive more than they pay in the tax.

Feds announce increase to relabelled carbon pricing rebate

However, while the price of carbon is applied consistently throughout the relevant provinces (Nova Scotia, Prince Edward Island, Newfoundland and Labrador, New Brunswick, Alberta, Saskatchewan, Manitoba, and Ontario), the rebates vary.

In Alberta, a family of four will receive $1,800 over the next 12 months in carbon tax rebates, $256 more than last year. That same family in Ontario will see a $144 increase in their annual rebates, which will now total $1,120.

The only provinces that aren’t seeing increased rebates are on the East Coast. This is because of the federal government’s decision to implement a three-year pause on the carbon tax for home heating oil late last year. While the pause was applied to each province using the federal backstop, the fuel is disproportionately used in Atlantic Canada. Therefore, less money in carbon taxes will be collected in the region, which will be reflected in the smaller rebates.

Atlantic Liberals push back against charges they ‘revolted’ over carbon tax

So, Canadians may feel more of a squeeze at gas stations starting in April, but in most provinces, they’ll also receive increased quarterly payments from the government meant to offset that financial burden.

All of this begs the question — does the carbon tax help you, hurt you, or leave you unaffected?

It depends both who you are and who you ask.

It’s widely accepted that upper-class Canadians are hit hardest by the carbon pricing policy, as the rebates fall short of the amount paid in taxes by the majority of the country’s richest households. This trend aligns with data from 

 that suggests wealthier Canadians are responsible for significantly more greenhouse gas emissions than those who are middle- or lower-class.

Essentially, the more you emit, the more you pay, and the more you’re hurt by the carbon tax.

Meanwhile, economists like the University of Calgary’s Trevor Tombe and the University of Regina’s Brett Dolter have suggested many of those middle-class Canadians actually see a net benefit from the policy.

“[Rebates] can lead to small gains in consumable income for the majority of households in the lowest income quintiles while largely offsetting carbon pricing costs for the middle income quintile and second highest income quintile,” reads a 

 by the Parliamentary Budget Officer determined “when both fiscal and economic impacts of the federal fuel charge are considered, … most households will see a net loss.”

Is there any chance the feds pause the increase?

Despite the pleas of Canada’s first ministers, it would appear to be extremely unlikely that the federal government will flinch. As recently as 

, Energy and Natural Resources Minister Jonathan Wilkinson reiterated his belief that carbon pricing is both a climate measure and, since it financially benefits lower-income Canadians, an affordability measure.

That’s been the message from the Liberals in the face of an onslaught from Poilievre, who has been urging the government to kill the policy at his ‘Axe the Tax’ rallies that have taken place across the country in recent months.

Yet, while Poilievre’s indignation has become expected, Trudeau and co. find themselves with increasingly few allies as April 1 approaches.

Conservative premiers like Alberta’s Danielle Smith and New Brunswick’s Blaine Higgs have long vocalized their opposition to the carbon tax. Saskatchewan Premier Scott Moe went a step further by unilaterally deciding to stop collecting and remitting the tax for natural gas, the legal ramifications of which remain unknown.

Saskatchewan could face multimillion dollar fine for withholding carbon tax payment, says legal expert

Last week, Ontario Premier Doug Ford urged the feds to “wake up [and] smell the coffee.”

“The carbon tax is the worst tax you could ever put on the backs of people,” Ford told reporters. “Cancel this carbon tax, put it on hold, do whatever, and if you don’t, the people of Canada are going to annihilate you when the election comes up.”

Newfoundland’s Andrew Furey, Canada’s only Liberal premier, joined his colleagues earlier this week in asking for a pause by writing a letter to Trudeau calling on him to “address the ramifications of the current challenges families face and to not compound them.”

N.L. premier Furey joins colleagues in call for Ottawa to pause April 1 carbon tax hike

The only provincial premiers who haven’t criticized the federal Liberals are B.C.’s David Eby and Quebec’s François Legault, both of whom lead provinces with their own carbon pricing systems in place.

Federally, Jagmeet Singh’s NDP, the party keeping the Liberals in power through a supply-and-confidence deal, has accused the government of pitting Canada’s regions against each-other by offering a carveout that Singh said unfairly benefits Atlantic Canada.

“What the Liberals have done is created a lot of chaos,” Singh said on Tuesday. “They opened the door to this chaos.”

Singh said his party remains supportive of carbon pricing but that “the approach has to be fair” and encouraged Trudeau to “take the GST of home heating.”

The carbon tax will return to centre stage in the House of Commons when parliamentarians return to Ottawa next week, as the Conservatives intend to use two opposition days to force votes on the policy ahead of the April 1 increase.

The carbon tax is set to increase to $80 on April 1, but what does that actually mean? And why are Canada’s premiers complaining when the federal government says most people actually financially benefit from the policy? iPolitics has you covered.

Political firestorm brews ahead of carbon tax jump on April 1

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