Carbon tax increase in Alberta should be offset ‘for most households’

Click to play video: 'Where you will notice upcoming federal carbon tax increase?'
Where you will notice upcoming federal carbon tax increase?
An increase to the federal carbon tax takes effect soon. Global’s Elissa Carpenter takes a look at where people will notice the increase. – Mar 31, 2023

It’s no April Fool’s joke.

The federal carbon price increase takes effect on April 1 will impact the costs to heat homes and run other gas appliances. But much of that is expected to be offset by household rebates, especially for Albertans with average or below average incomes.

“From the median household income and down, the household rebate on the carbon tax should be — for most of those households — bigger than what they are facing in increased carbon costs,” said Kent Fellows, assistant professor at the University of Calgary’s School of Public Policy. “So we price the carbon to try to get people to substitute away from it, but then there is a top-up that comes through that rebate.”

Fellows said the equation flips for many households with higher-than-average incomes.

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“Higher income people tend to spend more on higher emitting goods, so they are paying more in carbon tax and they are getting the same rebate that a lower income family would get, so this is what we call a progressive tax structure,” Fellows said.

Motorists expecting some sticker shock at the pumps, tried to get ahead of the increase.

“The prices fluctuate and from what I gather it might go up, so it’s better to fill up today than wait,” said Kamran Bukhari.

Click to play video: 'Prime Minister Trudeau urges Alberta to contribute to carbon-capture incentives'
Prime Minister Trudeau urges Alberta to contribute to carbon-capture incentives

“I was coming home and all the stations started to say like $1.40 a litre, and the stations close to my home were still $1.20, $1.21 so I thought I’d better fill up for less while I can,” said Calgarian Daryl Lavallee.

The carbon tax amounts to roughly 14 cents per litre on fuel, however we’ve already been paying about 11 cents.

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“What we are going to see at the pump is probably somewhere around two cents (increase),” the U of C assistant professor said. “I’d be really surprised if at midnight we watch that price go up all at once. Some stations may have already started to price it in. Others will price it over the next couple of weeks.”

In terms of impacts to industry, certain sectors like heavy emitters and agriculture are disproportionately affected.

Fellows said the federal carbon policies are designed with that in mind.

Farmers already have an exemption for the gasoline or diesel they use to plant and harvest crops.

A private members bill passed recently which will also exempt farmers from the carbon tax on the natural gas and propane they used to dry crops and heat barns.

However the bill isn’t expected to take effect until this fall.


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