Statement on the Introduction of Canadian Carbon Taxes
The federal government’s announcement on Tuesday means that a price on carbon pollution will exist across the country in 2019.
Canada’s federal carbon pricing backstop will apply to Saskatchewan, Manitoba, Ontario, New Brunswick, Yukon and Nunavut in 2019; all other provinces and territories will manage their own equivalent systems. We applaud the Canadian government for delivering on this critical piece of its climate action plan.
A carbon price will discourage greenhouse gas-intensive activities and help Canadian companies that create low-carbon goods and services, such as energy-efficiency services and electric buses. Analysis from Environment and Climate Change Canada shows that a price on carbon pollution across Canada will eliminate 50 million–60 million tonnes of greenhouse gas emissions in 2022.
We know carbon pricing works and that it can be designed to start reducing emissions without major economic harm. British Columbia, Alberta and Quebec—provinces that already have a carbon price—were the three fastest-growing economies in Canada last year.
The system announced by the federal government Tuesday rightly protects low-income households and sets aside funds to support municipalities, schools, hospitals, Indigenous communities, and small and medium-sized businesses.
It’s not a tax grab; the revenues raised in each province will be sent back to the people in that province through an annual tax rebate they can claim on their income tax form. The claimed amount will be the same per person based on the total revenues collected in your province (with a 10% bonus for rural Canadians and those living in small communities). In most cases, the rebate will be more than the price itself, protecting families as it encourages them to reduce costs by taking steps like turning down the heat at night and when no one is home, installing smart thermostats, choosing more fuel-efficient cars and using public transit, walking or biking.
Provinces that administer their own price on carbon will continue to use the proceeds as they see fit—right now that includes rebates, tax cuts, and investments in things like renewable energy projects, industrial and consumer energy-efficiency programs, and transit and infrastructure projects. A province in the backstop system could opt out at any time in the future to administer its own program.
The global economy is rapidly evolving to avoid the human, environmental and economic costs of climate change. Canadians are already being hit with these increasing costs. Extreme weather events are becoming more frequent. Higher sea levels put many of our communities at risk. Insurance payouts from extreme weather have more than doubled every five to 10 years since the 1980s. The list goes on.
We know the risks. We’re paying the costs. The longer we wait to do something, the more we’ll have to pay. A price on carbon emissions across Canada is a good step, and it is long overdue.
The International Institute for Sustainable Development (IISD) is an award-winning independent think tank working to create a world where people and the planet thrive. Our mission is to accelerate solutions for a stable climate, sustainable resources, and fair economies. We shine a light on what can be achieved when governments, the private sector, NGOs, and communities come together to share knowledge, commit to change, and build resilience. With offices in Geneva, Ottawa, Toronto and Winnipeg, our research spans the globe.
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