The federal carbon price rises today for everyone — but some Canadians can expect to get more money back from the program than others, and to see their rebates sooner and more frequently.
Canadians living in jurisdictions that don’t have carbon pricing policies of their own receive federal benefit payments to compensate for higher prices. Starting in July, individuals and families in Alberta, Saskatchewan, Manitoba and Ontario will receive their federal tax-free Climate Action Incentive Payments (CAIP) automatically every quarter.
The payments used to be delivered annually at tax time through a refundable tax credit. In last year’s budget, the federal government announced that the CAIP payments will now arrive quarterly.
It’s expected payments will arrive on the 15th day of April, July, October and January. Since the very first payment won’t arrive until July 15 (after 2021 tax returns are due), it will be a double payment. If you get your tax return by direct deposit, you will receive the CAIP the same way.
People who live outside Ontario and the Prairie provinces won’t receive federal rebates because their jurisdictions have their own carbon pricing mechanisms.
Conservatives want the carbon price suspended
At $50 per tonne of emissions, the year’s increase to the carbon tax amounts to a spike of 2.21 cents per litre of gasoline and 2.68 cents per litre of diesel. The Canadian Taxpayers Federation estimates the federal carbon price now adds a total of 11 cents per litre for gasoline, 13 cents per litre of diesel and 10 cents per cubic metre of natural gas.
Federal Conservatives have frequently opposed carbon pricing. Lately, the party has been calling on the Liberals to suspend today’s increase to help families cope with the rising cost of housing, food and fuel due to inflation.
“We really are having an affordability crisis,” said MP Kyle Seeback, the Conservative critic for climate change. “I get emails and phone calls in my constituency office every single day with people saying, ‘Kyle, we cannot make ends meet anymore.’ Everything is too expensive.”
The Liberals have dismissed those calls, saying some families might get back more money than they pay in carbon tax. Environment and Climate Change Canada estimates that in 2022-23, the CAIP will pay a family of four:
- $745 in Ontario
- $832 in Manitoba
- $1,101 in Saskatchewan
- $1,079 in Alberta
Rural households in these four provinces can expect a 10 per cent top-up.
“These payments mean some 8 out of 10 families receive more money back than they pay in direct costs under this system,” said Finance Canada.
The government says it returns 90 per cent of the money it collects through carbon pricing to consumers. It says the rest supports Indigenous groups, schools, universities, municipalities, small businesses and farmers.
Carbon price leaves some worse off
Despite the increase in the size and frequency of payments, some say the federal carbon price still leaves them worse off.
Farmers in particular complain the rebate doesn’t account for the increased cost of fertilizer and of transporting their harvests to market. While gasoline and diesel purchased by farm operations are exempt from the carbon tax, the propane they use to dry grain and heat barns is not.
Grain farmers like Corey Loessin tell CBC it’s become an added burden for his family-owned farm in Radisson, Sask.
“It far outstrips any personal rebate we would qualify for,” Loessin said.
A recent report from the Parliamentary Budget Office (PBO), Canada’s fiscal watchdog, concluded that for most households — especially high-income ones — the federal carbon price represents “a net loss.” The PBO considered the cost of the levy itself, the GST consumers must pay on it and its impacts on employment and investment income.
“When including the economic impacts as well,” said Parliamentary Budget Officer Yves Giroux, “most are worse off.”
But Dale Beugin, vice president of research and analysis at the Canadian Climate Institute, said he puts an “asterisk” on the PBO’s analysis because it doesn’t consider some important things — such as the cost of doing nothing to address climate change.
Beugin also said Canadians need to understand that carbon rebates don’t reimburse dollar-for-dollar what they pay at the pump because they’re meant to reward those who cut their consumption of fossil fuels.
“If everyone got back exactly what they were paying, there would be no incentive to change your behaviour, to drive less,” Beugin said.
Loessin said he doesn’t oppose the carbon price and farmers are keen to adopt new technologies that conserve fuel.
“The problem is that it doesn’t exist just yet,” he said.
In 2019, agriculture accounted for 10 per cent of Canada’s emissions. Most of those emissions came not from burning fuel but from other sources, like methane emanating from livestock and fertilizers. Those other emissions aren’t subject to a carbon price.
While the agriculture sector accounts for a considerable portion of Canada’s emissions, farm soil is a significant carbon sink, offsetting about 6 per cent of the sector’s emissions.