Canada’s Parliamentary Budget Office (PBO) anticipates Saskatchewan residents will pay the most carbon tax out of the four provinces under its umbrella, but a majority of residents are expected to get a larger rebate than what they pay.
The country’s independent financial watchdog laid out projected costs and rebates for Saskatchewan, Manitoba, Ontario and New Brunswick; the four provinces with climate plans that do not meet federal government standards on pricing pollution.
All four of these provinces are involved in legal battles over the tax with the federal government.
The PBO expects the average Saskatchewan household will pay $425 in carbon tax in 2019-20 with the pollution price on fuel set at $20 per tonne. With the price rising to $50 per tonne in 2023-24, the PBO estimates the average Saskatchewan household cost will reach $910 annually.
The PBO noted that is about twice the expected cost in New Brunswick, $193 this year and climbing to $435 in 2023-24. The average costs in Manitoba are expected to be $260, climbing to $581. Ontario residents face similar costs – $256 annually going up to $587.
The federal government has said that all money collected in a jurisdiction will be returned to that province or territory.
The tax is designed to be revenue neutral, and in provinces like Saskatchewan, that means income tax rebates for households.
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Even with high costs, the PBO expects a vast majority of Saskatchewan households will make a bit of money with the rebates.
Breaking income into five quintiles, the lowest income bracket is expected to make $70 n 2019-20 when the rebate amount is added to the carbon cost. As incomes rise, the net benefit decreases ($54 for the second quintile, $34 for third, $32 for fourth).
Households in the highest income bracket will have most of their carbon costs covered by the rebate, but the PBO estimates they will be out $50 total.
As the carbon tax rises, the carbon tax to rebate ratio is expected to mean an extra $131 annually going to the lowest income earners, while the highest income bracket pays $113.
The PBO estimates the carbon tax on fuel will generate much of the carbon tax revenue, $2.4 billion in 2019-20. The output-based pricing system (OBPS) for heavy emitters is expected to generate $200 million, bringing total carbon tax revenue to $2.6 billion.
This figure is expected to climb to $6.2 billion when the carbon tax reaches $50 per tonne.
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