Increasing Canada’s national carbon tax (aka the consumer fuel charge) as scheduled on April 1 by almost 19% to $95 per tonne of industrial greenhouse gas emissions from the current $80 per tonne, when we may be in a full-scale tariff war with the U.S. by then, is economic insanity.
Indeed, having a national carbon tax when the U.S. – our largest trading partner – doesn’t, and when President Donald Trump is pulling out of the 2015 Paris climate agreement while urging America’s oil and gas sector to “drill baby drill,” is lunacy.
On April 1, Prime Minister Justin Trudeau’s national carbon tax, aka the consumer fuel tax – applying to all provinces except Quebec and B.C., which have federally-approved pricing systems – will raise the cost of gasoline by 20.91 cents per litre and the cost of natural gas for home heating by 18.11 cents per cubic metre since its inception in 2019.
But seldom mentioned is that it also increases taxes on 20 additional forms of fossil fuel energy, all of which end up being paid by the public.
Here are the other fuels the carbon tax will increase the costs of on April 1, followed by its impact on prices since 2019:
Aviation gasoline (+23.26 cents per litre); aviation turbo fuel (+24.53 cents per litre); butane (+16.91 cents per litre); coke (+$302.07 per tonne); coke oven gas (+6.65 cents per cubic metre); combustible waste (+$189.74 per tonne); ethane (+9.68 cents per litre); gas liquids (+15.81 cents per litre); heavy fuel oil (+30.28 cents per litre); high heat value coal (+$211.95 per tonne); kerosene (+24.53 cents per litre); light fuel oil (+25.40 cents per litre); low value heat coal (+$168.38 per tonne); methanol (+10.43 cents per litre); naphtha (+21.42 cents pre litre); non-marketable natural gas (+24.17 cents per litre); petroleum coke (+35.84 cents per lire); pentanes plus (+16.91 cents per litre); propane (+14.70 cents per litre); still gas (+20.40 cents – per cubic metre.)
This is why the carbon tax raises the cost of almost everything because almost all goods and services are created using some form of fossil fuel energy.
Trudeau argues that because of the quarterly climate action incentive payments linked to his national carbon tax, most households paying it end up getting back more in rebates than they pay in carbon taxes.
But Yves Giroux, the independent, non-partisan parliamentary budget officer, says that when one factors in the negative impact of the carbon tax on the Canadian economy, including the lost income of workers and lower business investment, most households end up getting less in rebates than they pay in carbon taxes.
The Trudeau carbon tax was scheduled to keep increasing every year until April 1, 2030, when it would reach $170 per tonne of emissions.
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But that is no longer the case since Conservative Leader Pierre Poilievre has promised to kill the carbon tax if he wins the federal election later this year while Mark Carney, the presumptive favourite to win the Liberal leadership race on March 9 and thus become prime minister, has said he will replace it with a better new system.
The problem is Carney’s proposed reforms, which he hasn’t yet fully explained, are in some ways worse than Trudeau’s.
That’s because it doesn’t include rebates and will hide the costs of the consumer carbon tax from the public by folding it into a cap-and-trade carbon pricing system applied to large industrial emitters, which raises the prices of consumer goods as opposed to the taxes on them.
Because consumer prices are affected by a variety of factors this will make it very difficult to determine the specific impact of the consumer carbon tax on the added costs to the public.
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In addition, Carney is planning to introduce a new carbon tax – a tariff on foreign imports coming into Canada from other countries that, in the opinion of the federal government, do not have adequate carbon pricing regimes.
The additional costs to the public of the Canadian government imposing a tariff on these products will be paid by Canadian consumers who buy them.
The larger issue is Canada continuing to abide by rulings of United Nations-inspired international carbon pricing regimes, when major emitters such as the U.S. under Trump have made it clear they will not be bound by those agreements.
Given that Trump is apparently determined to damage our economy by holding an economic knife to our throats through a tariff war, we shouldn’t be helping him along with our own policies.