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A woman fills up her car with gas in Toronto on April 1, 2019.

Christopher Katsarov/The Canadian Press

New research shows that the federal carbon tax and rebate program benefits lower-income earners the most, backing Ottawa’s assertions about the policy aimed at cutting greenhouse-gas emissions.

The program, a federal backstop imposed on provinces that don’t have their own carbon price on consumer goods, will be introduced in Alberta on Jan. 1. It’s already in place in Ontario, Saskatchewan, Manitoba and New Brunswick. But it will be removed from the East Coast province as of April 1, when the proposed carbon tax from Progressive Conservative Premier Blaine Higgs comes into effect.

Those provinces are all either challenging the federal tax in court or intervening in the legal cases of others. However, the Liberal Party’s re-election in the fall has further emboldened the government to stick with its plan. Ottawa calls the carbon tax “one of the best tools” to spur innovation, cut pollution and limit the impact on affordability.

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In the spring, the independent Parliamentary Budget Office published a report that backed Ottawa’s contention that the program leaves the majority of households further ahead, but the federal Conservatives have consistently disputed the findings. When it was released, Conservative MP Pierre Poilievre said the PBO report was tainted because analysts relied on Liberal government assumptions. The Tories have called the carbon price a “tax grab” and a means to “pad” government coffers.

And a recent academic study from economists Jennifer Winter, Brett Dolter and G. Kent Fellows appears to add further weight to the Liberal position. The study, which has not yet been peer-reviewed, finds that the government’s rebates, which are paid to households through income-tax returns, benefit lower-income earners more, compared with most of the other options of returning the money to taxpayers.

The study compared the impact of returning the revenue through a lump-sum rebate, an adjustment to the GST rebate, a cut to provincial sales tax or an increase in the basic personal exemption. It found that a change in the means-tested GST rebate gives the greatest benefit to low-income earners, followed by the rebate option used by the federal Liberals. Conversely, the researchers found that an increase to the basic personal exemption would favour high-income earners, while a cut in sales tax has an equitable impact across income brackets.

“The takeaway is that the rebates do help to restore the spending power of households," Prof. Dolter, an assistant professor at the University of Regina, said in an interview.

“It is a progressive policy. The lowest-income [earner] comes out ahead,” he said.

Asked about the study’s findings, the Alberta government called the carbon tax “punitive" and an “unconstitutional intrusion into provincial jurisdiction.”

The province will use “every legal and political tool to fight the federal government’s retail carbon tax,” Environment Ministry spokesperson Jess Sinclair said in a statement. “We do not believe that Albertans should be punished for driving to work and heating their homes.”

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Alberta had its challenge to the federal carbon tax heard in the province’s Court of Appeal earlier this month. The court has yet to rule on the matter. The tax has already been ruled constitutional in similar cases brought forward by Ontario and Saskatchewan. Both provinces are challenging the rulings at the Supreme Court of Canada. The cases are scheduled to be heard on March 24 and 25.

Ottawa would prefer to resolve the matter outside of court, federal Environment Ministry spokesperson Sabrina Kim said in a statement. But she added that the government has been clear that “pollution can no longer be free anywhere in Canada.”

With the federal tax coming to Alberta in days, Ms. Kim said that “the vast majority of families will get more back than they pay, with lower-income families benefiting the most.”

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