Ottawa’s carbon tax on greenhouse gas-emitting fuels kicks in today in the provinces of Ontario, Manitoba, New Brunswick and Saskatchewan, and consumers in those provinces can expect an impact on their wallets.
The federal tax is designed to lower the country's carbon emissions, so Canada can meet the reduction targets it agreed to at the Paris climate summit. In the four provinces that refuse to enact any carbon pricing scheme on their own, Ottawa will apply its carbon tax on fossil fuels — which starts this year at $20 per tonne of GHG emissions.
In provinces that already have carbon pricing measures, such as Alberta, B.C. and Quebec, nothing changes. But the tax in the four non-compliant provinces will result in an approximate cost increase of 4.42 cents a litre for gasoline at the pump, 5.37 cents for light fuel oil (home heating fuel), 3.91 cents per cubic metre for natural gas and 3.10 cents per litre for propane.
Based on those figures, the average Ontario household is expected to pay roughly $10 more a month for natural gas (based on average of 252 m3 of consumption) as of April 1. That figure will be considerably lower in the summer but possibly much higher in the winter, when natural gas consumption for home heating spikes. The cost to fully refuel a Honda Civic (based on a 47-litre tank) will increase by about $2, while a full fill-up for a Ford Explorer SUV will cost about $3 more.
Consumers will not pay the tax directly to the federal government; rather, Ottawa will impose the tax on fuel and production and distribution companies, which will in turn pass on those costs to customers. A carbon price will be levied in the three northern territories starting July 1, 2019.
However, to compensate for the cost of living increase, the federal government has vowed to give people in the impacted provinces the 'Climate Action Incentive payment', or rebate. It's paid to eligible taxpayers who claim it on their 2018 tax return with the Canada Revenue Agency.
Here's what the average household will receive from the federal government:
In Ontario: $370 a year
In New Brunswick: $248
In Manitoba: $336
In Saskatchewan: $598
While the federal government has insisted the carbon tax will be revenue-neutral for Ottawa, a government official speaking at a technical briefing for journalists acknowledged that some Canadians — about 30% of them — will pay more per year in carbon taxes than they stand to gain from the new rebate program.
