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.
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:
- Wholesale Margin
- Retail Margin
- Federal Excise Tax
- Federal Carbon Tax
- Ontario Tax
- 61.0 (all in cents per litre)
- 0 Varies – usually 5 cents a litre
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.
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.”
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?
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 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!
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!
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!
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!
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.
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.
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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