Typical Atlantic Canada households will pay at least $1,316 in carbon tax by 2030: report

Parliamentary Budget Officer (PBO) Yves Giroux updated his federal carbon tax report from March 2022 to include Atlantic Canada. On average, most residents and households will pay more carbon tax than they receive in climate rebates.

"Most households will be worse off when considering this slightly lower economic activity," said Giroux. "Only the bottom quintile is better off, but everybody else is likely worse."

The PBO said Nova Scotia families from the lowest earning quintile would receive $226 in federal rebates, whereas the highest earners would pay $4,368 annually in 2030/31. A similar family from Newfoundland and Labrador would receive $689, with the province's highest earners paying $4,872 in 2030/31.

In 2019, the federal government introduced a price on carbon pollution, starting at $20 per tonne and increasing to $50 per tonne in 2022. On April 1, Ottawa expanded the tax to $65 per tonne with successive increases planned until 2030, when it reaches $170 per tonne.

Starting July 1, 2023, all four Atlantic provinces will join Alberta, Saskatchewan, Manitoba and Ontario, opting into Ottawa's carbon tax program.

British Columbia and Québec instead opted to implement their carbon tax regimes, with the former already paying a second carbon tax through fuel regulations, which increases the price of gasoline by about 17 cents per litre.

Quebec's provincial cap-and-trade carbon tax cost 8.8 cents per litre of gas before the hike on April 1 and must stay above 4.8 cents per litre in 2023. Quebec's provincial carbon tax will rise to 22.5 cents per litre of gas by 2030, according to La Presse — but they don't have to pay the same federal minimum carbon tax other provincial taxpayers pay.

By 2030, Albertans — hit the hardest by the tax hike — will pay 67.8 cents in fuel taxes per litre of gas, while Saskatchewan and Manitoba will pay over 80 cents. The average households in those provinces will see a net loss this year from the federal regime of $710, $410, and $386 annually, respectively.

Households in Alberta will pay $2,773 on average in 2030/31, according to the updated analysis on the carbon tax, compared to $2,282, as mentioned in last year's report. For Ontario, the average is now $1,820, whereas Giroux estimated the costs at $1,461 last year.

The PBO updated those new numbers "a little bit" owing to new data on the economy, population and income.

Despite the rebate payments offered by the federal government to offset the surcharge, Environment Minister Steven Guilbeault told CTV on April 2 that "on average, households will pay more" because of the $65 per tonne carbon tax.

"If you do the average, yeah, it's true, it's going to cost more money to people, but the people who are paying are the richest among us, which is exactly how the system was designed," said Guilbeault.

"The rich pay more for their carbon consumption and pollution, and we're supporting, through the transition, middle-class Canadians and low-income Canadians, and that's exactly what we're doing."

The PBO report assumes that higher-income households will use more energy since they have larger homes, possess more than one vehicle and tend to travel more.

By 2030, the PBO's report estimates the net cost of the carbon tax — taking into account fiscal and economic impacts — will be $1,513 on average for Nova Scotians,$1,521 for Islanders and $1,316 for Newfoundlanders.

That counters Prime Minister Justin Trudeau's speech at a March 14 press conference. He said the average family of four in Bridgewater, Nova Scotia, would receive a climate action incentive cheque worth $272 every three months.

 "We're fighting climate change while standing up for families and growing the economy through pollution pricing," he said. "That's over $1,000 a year and more than makes up for the extra costs because of the carbon price." 

"This is how you fight climate change."

New Brunswick announced it would scrap its provincial plan to opt into the federal program last month, but Giroux did not mention them in the report.

On March 30, Conservative leader Pierre Poilievre accused Ottawa of spreading falsehoods on the carbon tax, who also "misled the people of Atlantic Canada with this sneaky tax."

Terry Duguid, the parliamentary secretary to Guilbeault, addressed the accusations, claiming eight out of 10 families would be better off under the federal regime — $1,000 for Nova Scotia and P.E.I. families and $1,300 in Newfoundland and Labrador.

However, the PBO calculations determined that the average household in those provinces will pay $431, $465 and $346 more in taxes this year than they receive in rebates.

Giroux said Trudeau and his cohort are not accounting for the higher cost of business and the job displacement caused by higher taxes.

"It's just looking at this issue from one angle," he said. "When you look at the other aspects, the broader impact on the economy, and the related impact on the household, then I think it's a more accurate picture of the overall cost borne by households."

"We have said that the rebates would help the people most in need in Canada, and that's exactly what the system is doing," said Guilbeault.

The environment minister said Ottawa is doing other things to mitigate the cost of climate change and help people transition to a lower carbon economy, citing the incentive programs to purchase electric vehicles and home energy retrofits to reduce home heating costs.

"This is another way we're helping Canadians reduce their environmental impact, but also their overall energy costs," he added, claiming the PBO's report does not consider the total cost of climate change.

Guilbeault also said the report fails to "account for economic opportunities that come with driving cleantech innovation" and referenced Budget 2023, which earmarked funds for clean energy.

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