People in each province to get different Federal carbon tax refunds next year
When the federal government’s carbon tax increase kicks in next summer, it will add 3.3 cents to the price of a litre of gasoline, or about $1.65 to a typical fill-up.
But Canadian families will receive at least $224 more in carbon price refunds next year, which will cover increased fuel costs for 80 per cent of the population, the government says.
And those payments will start going out to people in Nova Scotia, Newfoundland and P.E.I., as they join Ontario and the Prairie provinces in the federal backstop program for provinces without their own carbon tax regime.
This means B.C., Quebec and New Brunswick, where local carbon pricing programs are in place, will be the only provinces where people do not get federal refund cheques. (Lower-income BC residents get a provincial climate tax credit.)
These quarterly payments are becoming the most visible half of the federal government’s carbon pricing system — the backbone of its efforts to fight climate change. While opponents have criticized the tax for making fossil fuels more expensive, proponents in Ottawa tout the payments that compensate families.
“The cheques make it real for people,” said Brenna Walsh, energy co-ordinator at the Ecology Action Centre in Halifax. “We see a three-cent fluctuation in gas prices on a regular basis.
“For many Nova Scotians, a three-cent increase is not a make-or-break amount,” she said. “But now they know they’ll be receiving more money than they pay out.”
According to numbers provided by the Finance Ministry, a family of four in Nova Scotia will receive Climate Action Incentive (CAI) payments of $248 every three months starting next July 1, totalling $992 a year going forward.
In Ontario, the CAI going to a similar family will rise to $976, in Manitoba it will be $1,056, Saskatchewan $1,360 and Alberta $1,544. In Newfoundland and Labrador, it’s $1,312 and in P.E.I., $960.
Nova Scotia Premier Tim Houston does not think this is a good deal, putting out a statement Tuesday expressing his “profound disappointment” that the carbon tax will be applied “at a time when fuel and heating costs are at an all-time high and many Nova Scotians are struggling.”
“Let me be clear — Nova Scotia supports action on climate change but doesn’t support a carbon tax of any amount on home heating oil at this time,” he said. “A new fuel tax when there are record highs at the pumps also makes no sense. We have been told this is intended to change behaviour, but even with today’s prices, we aren’t seeing any significant change.”
At a news conference in Ottawa, Liberal MP Seamus O’Regan shot back, saying: “This doesn’t happen until July. I am sick and tired of people talking about the cold winter.”
The Newfoundland MP defended the hike in the carbon price, “Climate change is real and it’s not taking a break because of inflation.”
“When you see a price put on pollution, that is not money lost. That money is now coming back to you,” he said “This is about making life more affordable while lowering emissions.
“It is a good system that works in Ontario, that works in Alberta, and it will work in the Maritimes and Newfoundland and Labrador.”
The carbon pricing system includes two branches: a consumer tax on fossil fuels such as gasoline and natural gas, and an industrial carbon credit-and-trade system for big polluters. Provinces are required to meet minimum benchmarks for both systems in order to administer their own programs and if they do not, the federal “backstop” kicks in.
Until now, the backstop applied to the fuel charge in Ontario, Manitoba, Saskatchewan and Alberta. On July 1 next year, Nova Scotia, P.E.I. and Newfoundland will join after their provincial plans were rejected for not meeting the federal benchmark.
On that day, the carbon price will rise to $65 from $50, adding a total of 14.3 cents to a litre of gasoline, 12.4 cents to a cubic metre of natural gas and 17.4 cents to a litre of heating oil.
Ottawa says 90 per cent of the money collected from the fuel charge is refunded to consumers through the quarterly CAI payments. People in each province get a different amount, based on average consumption of fossil fuels. Those in rural areas, who rely more on personal vehicles to get around, get a 10 per cent bonus.
The remaining 10 per cent of fuel charge revenues go toward carbon reduction programs for Indigenous people and small businesses.
The carbon tax and refund system puts a lot of faith in pricing to change people’s behaviour.
But emissions from driving and heating are not easy to reduce without a significant outlay of money in a new electric vehicle or a switch to an electric heat pump instead of a furnace, said the EAC’s Walsh.
That’s why she was encouraged by Monday’s announcement of $250 million in federal funding that will provide $5,000 grants to help people switch from heating oil or natural gas furnaces to electric heat pumps.
“I’m happy to see funding for getting off of heating oil,” she said. “We need to ensure that those costs don’t unjustly fall on low-income families.”
This article was reported by the Star.