Contentious carbon tax set to increase April 1

THE CANADIAN PRESS/Justin Tang

Environment and Climate Change Minister Steven Guillbeault, pictured, says, “The politics surrounding the price on carbon have reached a fever pitch.”

The carbon tax is set to increase from $65 to $80 per tonne on Monday, despite calls to hit the pause button by some premiers and stakeholder groups.

Prime Minister Justin Trudeau pushed back on the opposition, issuing a two-page letter on social media this week defending the pricing regime. He said eight out of 10 families get more than they pay, and the program is yielding “tangible results” in terms of reduced emissions.

Conservative Leader Pierre Poilievre’s “axe-the-tax” message linking the carbon tax with the affordability struggles continues to resonate with many Canadians across the country. Trudeau said the government is acutely aware of the financial pressures, but noted the carbon price has a very small impact on inflation.

“It’s critical to dispel the misconception that Canada’s carbon pricing system is a significant driver of inflation, because that is demonstrably false,” he said, adding that all provinces and territories have been invited to craft their own carbon pricing systems as British Columbia, Quebec and the Northwest Territories have done.

The Canadian Centre for Policy Alternatives called it a “great irony” of the carbon pricing debate that most households get back more in carbon rebates than they pay in fees.

“Pausing the planned increase to the carbon price or abolishing it altogether would actually make most Canadians poorer,” said senior researcher Hadrian Mertins-Kirkwood in a statement to Means & Ways. “That being said, the impacts of carbon pricing, from both an environmental and economic perspective, are drastically overblown. Carbon pricing is one piece of the climate policy puzzle but it gets far more attention than it deserves."

The federal policy was introduced in 2019 as an incentive for people and businesses to reduce consumption of fossil fuels in favour of greener sources of energy.

But small business owners say the tax - and the “giant hike” kicking in Monday – are unfair.

Dan Kelly, president of the Canadian Federation of Independent Business (CFIB) said more than half (56 per cent) of small firms will be forced to raise prices to accommodate the tax, 45 per cent report they will need to freeze or reduce wages, and a third (33 per cent) say it will reduce their ability to invest in environmental initiatives.

“The first thing Ottawa must do is freeze the upcoming tax hike. The whole carbon tax system has become a shell game, and sadly, small firms are unfairly punished by it,” he said in a news release Friday.

“Making the problem worse is the fact that Ottawa has not delivered on promises to return a portion of carbon tax revenues to small businesses Ottawa is sitting on $2.5 billion in carbon tax rebates intended for small firms, calling into question the government’s claim that the tax is revenue neutral.”

A poll by Angus Reid out this week found that the proportion of Canadians supporting an increase in the carbon price in their province has increased seven points compared to November 2023, from 15 to 22 per cent. Two-in-five Canadians who would vote for the Liberals, NDP or Bloc Quebecois say they think the government should impose the increase as planned, while a smaller number say it should be held at its current level.

“The problem for the government is that these would-be supporters are a much smaller group than they were at this time last year. The vast majority of those who would support the Conservatives would ‘axe the tax’ (75 per cent) or at least lower it (nine per cent,)’’ said a news release from Angus Reid.

The poll also found that cost of living concerns (56 per cent) should outweigh climate change concerns (31 per cent) when making economic policy.