The Alberta government will send out a carbon-tax rebate to households next month, another quarterly installment in a payment that is aimed at reducing both the levy’s burden and the political opposition to it.
As Alberta’s politicians debate the provincial carbon tax, the federal government is looking to copy its rebate plan as it prepares to impose its own carbon tax in provinces that do not have their own or fail to meet federal stringency standards. That includes Saskatchewan, and now Ontario, as a result of premier-designate Doug Ford’s decision to kill the province’s cap-and-trade system.
As the political heat around carbon taxes rises, conservative politicians believe they have an issue with popular appeal. They argue carbon taxes increase energy costs and burden families who are struggling to make ends meet and have few options to reduce their fuel consumption.
Federal Conservative Leader Andrew Scheer ratcheted up the attack last week with a Twitter post that included a table laying out what he said the Liberal tax “could” cost people in each province, although his figures were criticized as highly inflated.
To counter that, Prime Minister Justin Trudeau has vowed the money will be returned to the province where it was collected, and he and Environment Minister Catherine McKenna are increasingly talking about rebates for homeowners and small businesses.
Ottawa’s Greenhouse Gas Pollution Pricing Act was proclaimed into law last week, and the Trudeau government now has to determine in which provinces it will apply, and add regulatory detail.
“We’re going to ensure that moneys collected in any jurisdiction are returned to the citizens of that jurisdiction,” Mr. Trudeau said at a news conference last week. “And I will highlight that the legislation we just passed allows us ... to directly return moneys collected in Ontario to Ontarians and that is certainly our intention.”
Provinces that have adopted carbon pricing − whether direct taxes or cap and trade − have found many ways to return the funds.
British Columbia reduced personal and corporate income tax rates when its former Liberal government brought in the country’s first carbon tax in 2008. However, the political impact is muted because many taxpayers have lost sight of how those savings are connected to the carbon tax.
Alberta has a mixture of rebates and spending on measures to help households and businesses cut energy use, which would reduce the impact of the tax and their overall fuel bills.
The rebate is based on income and family size − not energy use − which means middle-income households can reduce their energy consumption and save money on fuel and still collect the full rebate. It is phased out for higher-income Albertans.
The NDP government says the cost for the average family of its current $30-a-tonne tax is $508 direct, and $75 to $110 indirect, essentially costs that businesses can pass on. Its full rebate is $540.
That average masks a wide disparity, depending on the number of people in the home, income levels, whether they live in a city or a small or exurban town and so on, said Jennifer Winter, an economist at University of Calgary’s School of Public Policy.
Last year, Ms. Winter calculated what a $50-a-tonne carbon price would cost an average family in various provinces. In an interview on Friday, she cautioned that her figures are based on 2013 energy use and do not include Alberta’s rebates or reduced income tax rates in B.C., nor do they reflect consumers’ efforts to reduce fossil-fuel consumption that would result from higher taxes and government programs funded by them.
Based on the federal government’s planned $50 carbon tax in 2022, they range from $1,111 a year for an average family in Alberta to $707 in Ontario and a low of $603 in British Columbia. Alberta’s total includes increases in electricity costs, although Premier Rachel Notley’s government has since capped electricity prices.
Economist David Sawyer says even those figures are likely too high, especially given the impact of regulations like tighter fuel-economy standards or subsidies that encourage homeowners to reduce energy use.
Meanwhile, Conservatives ended the Parliamentary session with an aggressive attack on the Liberals for failing to outline what the federal carbon tax will cost individual households, accusing the government of a “cover-up.”
“Carbon taxes are insidious because their costs are embedded in literally millions of products,” Conservative finance critic Pierre Poilievre said. “They should know by now what the costs will be.”
Ms. McKenna argues it is impossible to know the impact on consumers until the federal government has determined in which provinces it will apply, and how the revenues will be returned to households and businesses.