Gasoline will cost 11.6 cents more per litre once the Liberal carbon-pricing scheme reaches $50 per tonne in 2022, according to documents the government published this week.
The paper, presented jointly by Finance Canada and Environment Canada, laid out the Trudeau government’s plan for taxing carbon pollution across the country – the plan it will impose on any province or territory that, by spring 2018, doesn’t have its own comparable strategy.
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The 25-page report detailed the scope of the federal carbon tax, explaining that it will apply to liquid fuels (gasoline, diesel and aviation fuel, for example), gaseous fuels (such as natural gas) and solid fuels (like coal).
The report offers a picture of what extra costs certain fuels will see once the carbon tax is imposed beginning in 2018 at $10 per tonne, and eventually increasing to $50 per tonne in 2022.
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By 2022, the price on carbon pollution will mean 11.6 cents added per litre of gasoline, 13.7 cents per litre of diesel, 12.4 cents per litre of aviation gasoline and almost 13 cents per litre of aviation turbo fuel.
Natural gas will see a levy of 9.8 cents per cubic metre, propane will be up 7.7 cents per litre, and coal and coke will see levies ranging between $88.62 and $158.99 per tonne depending on the specific type.
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Does this show exactly how much more Canadians will be paying to fill their vehicles, take a flight, heat their homes or light up a barbecue?
Not exactly.
An official with Environment Canada who presented the government’s plan for carbon pricing, said the levy on fuels will be imposed early in the supply chain. As a result, consumers, for the most part, will only experience the levy if it’s included in the final price of a product and results in a higher price.
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But companies won’t necessarily download the full price of the levy onto consumers, said Mitch LaBuick, an indirect tax specialist at BDO Canada.
In Alberta, for example, prices at the pump didn’t immediately go up 4.5 cents per litre on Jan. 1, when its new carbon levy came into effect, he told The Canadian Press. Other factors, like business decisions on profit margins and competition can also play into how much higher a price will go, LaBuick said.
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In other words, determining exactly how much a carbon tax will raise prices is difficult.
Last week, a University of Calgary economics professor took a look at what a $10- and $50-per-tonne carbon tax rates would mean for households across the country – assuming no behavioural changes in consumers.
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Jennifer Winter found that when the $10-per-tonne tax is imposed in 2018, households will pay an additional $121 a year in B.C., and up to $224 more in Nova Scotia. At $50 a tonne, those costs rise to $603 in B.C. and $1,120 in Nova Scotia. People in provinces with larger renewable sources of electricity will pay less.
But again, that all assumes consumers don’t drive less, purchase fuel-efficient or electric vehicles, or outfit their homes with efficient appliances, or upgrade their insulation and windows.
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Right now, most Canadians live in jurisdictions where carbon pollution is levied in some form.
B.C. and Alberta have carbon taxes, while Ontario and Quebec have cap-and-trade systems. Nova Scotia, meanwhile, has said it intends to create a cap-and-trade system in 2018, and the other Atlantic provinces are gauging whether to join Nova Scotia’s plan or go it alone.
The other provinces and territories have all been invited to develop and implement their own systems for taxing carbon pollution, so long as the rates meet the minimums Prime Minister Justin Trudeau outlined in October. All but Saskatchewan have agreed to do so.
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The scheme published yesterday will be imposed on any province that doesn’t have its own in place by spring 2018, or is reasonably on its way to implementing one. The federal plan is also available to any province that doesn’t wish to develop its own.
Since announcing its intention to impose carbon taxes on the provinces and territories, the Liberals have said that any revenue generated from whatever scheme is implemented will go directly back to the province.
Ottawa is still determining exactly how that will happen; officials said this week, they are so far looking at ways to return the funds to residents or businesses, which could help offset rising costs of energy.
— With files from The Canadian Press
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