EV filling up

Canada’s Carbon Tax Confusion

Canada’s Carbon Tax

The Government of Canada passed the Greenhouse Gas Pollution Pricing Act in 2018, increasing the cost of gasoline and home heating in Canada for consumers by implementing a Carbon Tax. The Act also effects the amounts for energy use charged to industries and businesses – and I am not addressing this portion of the Act.

I personally don’t feel that the Carbon Tax for consumers is of any benefit so I thought I would look at how it impacts the average person.

How Much Gas Tax Am I Paying?

When I put gas in my car in Southern Ontario (OK, I leave the car empty so my husband will do it), I often wonder, – just how much of that gas money goes to the government?

The cost of regular unleaded gas in Southern Ontario is currently about $1.37.2 a litre or $1.56.2 a litre for premium. Elsewhere in Ontario it’s about a penny more and in Northern Ontario it’s about 11 or so cents more.

A man puts gasoline in his car
Photo by Skitterphoto on Pexels.com

The Cost of Gas

The cost of gas has been up and down, but as Canadians, we’ve been used to paying more for gas forever. Some of us Canucks have been known to head over the border (pre-pandemic) just to fill up the tank for less. We know that there is a lot of tax in the cost of gas already – we have been conditioned to it! But I wondered, just exactly how much we pay the government for gas.

Not long ago this was visibly displayed at the pump but now I have to look it up at an Ontario Government site: https://www.ontario.ca/page/motor-fuel-prices

If I look just at the cost for unleaded gasoline today – in just Toronto -here is the breakdown:

  • Crude
  • Wholesale Margin
  • Retail Margin
  • Federal Excise Tax
  • Federal Carbon Tax
  • Ontario Tax
  • Total
  • 61.0 (all in cents per litre)
  • 26.4
  • 0 Varies – usually 5 cents a litre
  • 10.0
  • 8.8
  • 14.7
  • 16.3
  • 1.37.2

So of the price of $1.37.2 per litre, only 87.4 cents is the gas and margin. The rest – 49.8 cents per litre goes to the government. 36% goes to the government?

AND on April Fools Day 2022 our Carbon Tax will increase to 11.05 cents per litre.

Now I believe in Climate Change, and I believe we should try to do our part to reduce our carbon emissions. NO QUESTION. It’s just that I don’t believe the Carbon Credit does anything. It doesn’t buy me a TESLA, build me a wind turbine, or plant a tree.

An electric vehicle gets charged
Photo by Kindel Media on Pexels.com

Carbon Taxes are for Economists and Politicians

Carbon Taxes are a popular solution for Economists and Politicians. They seem like a good idea, but they are really just an easy way to say “Hey – We’re Green”. Putting a tax on gas is something that’s easy to implement for our government because we are so used to paying taxes on gas already. It’s a quick and easy fix with a few tweaks to our bureaucracy. “What the heck – just throw an extra tax on the little people.”

Justin Trudeau thinking about saving the world with a Canadian carbon tax
What the heck, let’s tax them more! What an idea!

How Does the Carbon Tax Affect Us?

Doing a little bit of household math – just guesstimating here – if my husband and I drove our car 20,000 km per year and our average gas mileage was 10 litres per 100km, that would be 2000 litres. I’m pretty sure we drive more than that, and we don’t work – but Canada is a big place. So the price for carbon (at 8.8 cents) would be $176 per year. Next year at 11.05 cents it would be $221.

Our house is 130 years old and heated with Natural Gas. According to our gas company: “It’s forecasted that for the average Ontario household, the federal carbon charge will add about $172-$188 to your annual natural gas bill between April 2021 and March 2022“. Checking our bills, I calculated that we used 4433 cubic metres last year at a Carbon Tax of 7.83 cents per cubic metre, for an actual cost of $347.

I don’t see any mention of Carbon Tax on our electricity bill, although I know there is a Natural Gas powered electricity generation station not too far from us. I’m sure that’s carbon neutral?

Natural Gas Powered Electricity Generating Plant in a haze
Natural Gas Powered Electricity Generating Plant in a haze

So far our direct Carbon Tax cost is $523 – and then Revenue Canada gave us back $450 as a Climate Action Incentive. There is no reason for this, just a refund per person or household to give us back the Carbon Tax. How did this make us use less gas? What this says to me is that if you can afford it, then it is tolerated but what about people who cannot afford to cashflow the governments ideas?


Putting a price on carbon pollution is the most effective and efficient way to reduce the greenhouse gas emissions associated with climate change, but Canadians are also concerned about what that price might mean for their own pocketbooks. That’s where the Climate Action Incentive payments come in. Most households will receive more money back through these payments than what they will pay out due to federal pollution pricing—helping families to make ends meet as we move toward a cleaner future.” – The Honourable Bill Morneau, Minister of Finance

What I conclude from this statement is that the average consumer will pay more for gas and household heat (and by extension food and household goods because of the increased transportation costs), but will receive more than they paid out back in a nice tax refund the next year. The actual proceeds of the tax don’t seem to go to green projects, they just come back to us?

The Carbon Tax Idea

The idea of Carbon Tax is to encourage us to use the increased cost of energy to encourage us to use less energy and therefore save the planet. I don’t think it does this at all. To me it’s just a shell game, that seems nice. Our government gets to say it is meeting it’s Carbon Reduction targets – but how did it do that?

Carbon tax shell game
Carbon Tax shell game

Carbon Taxes are Regressive

Carbon Taxes are regressive. People who have lower incomes already spend a greater percentage of their incomes on heating their homes, and paying for transportation. Charging them more doesn’t make them buy a Tesla.

Adding to this effect, getting food transported across this great country becomes more expensive with Carbon Tax – so food costs more and again effects people with lower incomes on a greater scale.

At the other end of the spectrum, our entitled politicians and economists may not be financially incented to save energy. Food, fuel and home heating expenses are a smaller percentage of our leader’s net incomes – kind of miniscule, I would think!

GOLDSTEIN:|  Toronto Sun
 Justin Trudeau and Duchess Camilla talk about reducing their heating bills
Climate activists getting together – Justin and Camilla worrying about their home heating bills

Carbon Taxes are so Successful in Other Countries……..

One of the justifications for carbon taxes is that “most countries that have implemented carbon taxes before Canada have done so successfully with a reduction in their carbon output”. This summer while we drove across our beautiful country, I couldn’t help but think that “the shoe didn’t really fit us”.

The justification for the international success rate of carbon taxes is actually pretty flimsy. ” emissions have declined in Finland, Denmark, Sweden and the Netherlands relative to those in other 13 European countries in which carbon taxes are not in place. However, Finland was the only country where the decrease in emissions was statistically significant“. https://econofact.org/carbon-taxes-what-can-we-learn-from-international-experience

Note that Finland has an area of 338.5 square km, with a population of about 5.5 million people. Now Finland is to be commended for its’ success, but we can’t say based upon the success of one country that “most countries” with carbon taxes have been successful!

Canada is approximately 9.9 million square kilometres in area. While our population tends to be concentrated in cities and along the U.S. border – our 38 million people are nicely spread out. People want to move here because of that! And guess what? We drive alot because things are far apart. There is public transportation within major cities, and a train that goes across the country – but not between many places! For example, we live in the most densely populated area in Canada, known as the Greater Toronto Area (GTA). Hard to believe that it takes 3.5 hours to travel from St. Catharines Ontario to the Kitchener Waterloo area by public transport (Bus/Train), a mere 124 kilometers. Maybe an investment here would be a boost to the economy not to mention the reduction of automobile transport – this is the tip of the iceberg on this subject and I will save this for another rant!

A train carried goods across the Prairies of Saskatchewan to who knows where?
A train carried goods across the Prairies of Saskatchewan to who knows where?

It’s darn cold in the winter and hot in the summer. We need to heat and cool our homes! Another funny thing we Canadians do by the way is chop wood and burn it in our fireplaces when the cost of home heating gets too high! I’m sure the people of Finland do that too. Try to tax that or measure its’ carbon footprint!

Time to chop wood at the woodshed
Time to chop wood at the woodshed

We are a country of natural resources: grain, timber, minerals, food – you name it – we have it and it needs to travel 1000s of miles in trucks and trains – spewing carbon – and then it needs to travel by planes and ships to get to other parts of the world that may not be worried about Carbon output at all!

Wide open spaces and lots of food growing
Wide open spaces and lots of food growing

Like most Canadians, we try our best to use less energy and materials everyday without worrying about a contrived Carbon Tax system. Maybe someday we will buy an electric car when they become practical. There are more around everyday in Southern Ontario and major cities. We didn’t see any that weren’t near a major city when we drove across Canada. We were surprised to see this dusty Tesla fill up station in North Western Ontario.

Deserted Tesla station North Eastern Ontario
Deserted Tesla station North Eastern Ontario

I would love to see real Carbon Incentives for buying electric vehicles or installing Solar Panels. I would love to see those 2 billion new trees planted that our Government announced in 2020 that are supposed to be completed by 2030.


The project seems to be in the “seedling” phase right now, – it’s almost 2022 and I’m not sure if any trees have been planted, but it’s a good idea.

Kananaskis Alberta trees
Kananaskis Alberta Trees

I know that the Carbon Tax has no effect on my choices though, and it certainly doesn’t help us to reduce our Carbon output.

The Canadian Carbon Tax is Greenwashing. Greenwashing is when an organization or government spends more time marketing itself as green and sustainable than actually minimizing its environmental impact.

There are so many things that can be done to reduce our carbon emissions, but I don’t see Carbon Taxes for consumers as being a real solution.

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6 thoughts on “Canada’s Carbon Tax Confusion

  1. I generally agree with what you are saying and that the carbon tax is flawed. However, flawed though it be, it’s not completely pointless. As my heating bill increases I am more and more inclined to add insulation to the attic to lower my heating costs. As gas goes up I am more gentle with the gas pedal. I will not replace my car any earlier than if the tax were not there but I will probably look for a car with better mileage than the one I’m replacing. In Alberta we had an NDP provincial government for one term. I never favour or vote NDP except for when Rachel Notley was leading it. She’s more practical than most leaders, NDP or not. She used the provincial cabon tax to invest in green technology. So not only does the carbon tax make me try to use less gas or maybe turn the heat down a half degree, but the funds go to building solar power and wind power and other technology. So yes it’s flawed and probably regressive, it’s not completely without merit.

  2. Good topic, for sure. If the carbon tax was used to develop true green technologies, instead of as a consumption tax/wealth transfer, we would all be better off. Rachel had the right idea, but Kenney still has not figured it out. As to saving energy, that would require that everyone stop driving huge pickups and SUVs, walk and cycle more and carefully plan out the trips they make. Wind, solar and EVs may not polute when in use, but they are simply displaced carbon to make everyone feel good. I have driven fuel efficient vehicles for almost 40 years. We even have a 9 year old Prius, but have no illusions that it is actually greener over its lifetime. It is just a pleasnt car to drive. We do not use remote starters, nor do we leave cars running for 15-20 minutes to warm up/cool down. We start and 15 seconds later we drive away. We walk and cycle for local shopping and plan our trips into the city for the same day, where possible. We are doing our best and that is all we can do. Cheers. Allan

  3. I feel like you hit the nail on the head here. It doesn’t really change consumer patterns but “looks good”. Give me a tax incentive to buy a hybrid or put in solar panels but they have yet to do that. For the most part what we, the little people, do doesn’t have that huge of an impact compared to the big polluters. I know every bit helps and I don’t use my dryer and multi task on trips to the city but really it helps me save a little but it’s not really saving the planet.

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