Federal carbon tax increases coming
On Friday, Prime Minister Justin Trudeau released the federal government's strategy to reduce greenhouse gas emissions by 2030 — and its centrepiece is a gradual hike in the federal carbon tax on fuels from its current level of $30 a tonne this year to $170 a tonne by that year.
The carbon tax will increase significantly from its current level — the tax is just $30 a tonne this year — as part of a push to meet and surpass Canada's ambitious goal of reducing greenhouse gas (GHG) emissions by 30 per cent below 2005 levels by 2030.
The tax already was expected to hit $50 a tonne in 2022. With this new initiative, the tax will now increase by $15 a tonne each year for the next eight years in order to wean consumers off fossil fuels in favour of cleaner energy sources.
The tax hike will result in higher costs for consumers when they buy gasoline. The price at the pump will increase by 37.57 cents a litre by 2030 as a result of this new plan, and the cost of light fuel oil for home heating, natural gas and propane will rise as well.
$15B in new spending
Beyond the carbon tax hike, the government is also promising $15 billion in new spending on climate initiatives over the next 10 years — money earmarked for improvements to the country's electric vehicle charging infrastructure, rebates and tax write-offs for zero-emissions vehicles and funding for home retrofits, among dozens of other proposed policies.
Commitment to make it revenue neutral
To compensate for the cost-of-living increase, the government said it will continue to return most of the money collected by this program through rebates. Under the current system, the money is returned to individuals and families annually through the 'Climate Action incentive payment' when they file tax returns.
Starting in 2022, the carbon pollution rebate payments will be distributed on a quarterly basis. The average family of four in Ontario will collect roughly $2,018 a year in climate rebates by 2030. The cheques will be higher in provinces like Alberta and Saskatchewan — $3,242 for a family of four in Alberta and $3,829 for a similar family in Saskatchewan — because the people in those provinces generate more carbon emissions per capita.