A Carbon Tax Rebate in Every Mailbox as Trudeau Unveils Federal Backstop

Households in Manitoba, New Brunswick, Ontario, and Saskatchewan will receive carbon tax rebate cheques under a plan unveiled yesterday by Prime Minister Justin Trudeau that will extend the federal floor price on carbon to provinces that don’t introduce their own carbon pricing schemes.

“The science is unequivocal: putting a price on pollution is one of the best ways to move forward,” Trudeau told media and Humber College students in Etobicoke North, the riding held provincially by Premier Doug Ford and federally by Science and Sport Minister Kirsty Duncan.

• Be among the first to read The Energy Mix Weekender
• A brand new weekly digest containing exclusive and essential climate stories from around the world.
• The Weekender:The climate news you need.

Subscribe

“The problem exists because your political leaders have done far too little about this,” Trudeau added. “Will we kick this can down the road yet again? Or will we show some courage to do what needs to be done?”

The federal “backstop” plan, long promised under the pan-Canadian climate program, will result in average “incentive” payments next year of C$248 in New Brunswick, $300 in Ontario, $336 in Manitoba, and $598 in Saskatchewan. By 2022, when the federal floor price hits $50 per tonne, average rebates will total $583 in New Brunswick, $697 in Ontario, $797 in Manitoba, and $1,419 in Saskatchewan.

In every year and in each of the four provinces, that average household will get more money back in rebates than it pays out in carbon taxes—a calculation made possible by a federal plan that imposes the tax on both households and businesses, but only returns any of the funds it collects to households.

“The first cheques will be sent out by next summer, meaning they will arrive well before the federal election in which the carbon tax and how parties address climate change are expected to be major issues,” the Globe and Mail notes, citing a federal official. “The vast majority of the revenue collected will be rebated on a per capita basis, but some small portion of it will be used for programs to help households and businesses reduce their energy use, and to provide additional help for rural people who are heavily dependent on diesel.”

Most Canadians, but not all, will come out ahead under the new system.

“While Trudeau insisted that the carbon tax and the payment program will be revenue-neutral for the federal government, a government official at a technical briefing for journalists acknowledged that some Canadians—about 30% of them—will pay more a year in carbon taxes than they stand to gain from the new backstop program,” CBC explains. “The official said these people are more likely to be wealthier Canadians who have to heat bigger homes or fuel larger vehicles.”

But “a sizeable majority of Canadians receiving the federal payments—the other 70% in those provinces without carbon pricing plans of their own—will receive more in climate payments than they’ll pay each year through the new carbon tax.”

Conservative leader Andrew Scheer and Saskatchewan Premier Scott Moe called the announcement a pre-election gimmick, while Ford took umbrage at Trudeau venturing to Ford Nation country to unveil the program. But Climate Action Network-Canada Executive Director Catherine Abreu lauded Trudeau for refusing to “bow to industry pressure and provincial politicking” and keeping his promise to implement a national carbon price.

“The latest UN climate report makes it clear that climate change is a health emergency and carbon pricing is a critical way of addressing that emergency,” Abreu said. “Political leaders in provinces and in Ottawa who continue to pretend pollution is free and score cheap points with the denial of climate action are doing a criminal disservice to Canadians.”

“The government is taking the right approach, ensuring Canadians are incentivized to cut pollution—but aren’t punished if they can’t,” agreed Clean Energy Canada Executive Director Merran Smith. “Putting a price on pollution works. It cuts pollution and spurs innovation in our economy. We have seen this in B.C., Quebec, and many other jurisdictions in North America and around the world, so it’s an important addition to the federal government’s policy toolkit.”

Smith added that, “while there aren’t many politicians in Canada who still deny the science of climate change, many still deny that there are practical solutions—or simply refuse to show their hand. Frankly, that’s just as reckless.”

“Pollution isn’t free,” said Pembina Institute Federal Policy Director Isabelle Turcotte. “Pricing pollution will make our air cleaner, creating healthier communities while ensuring equity for all Canadians.”

Turcotte added that “a well-designed price on carbon, like we’re seeing in the announcement today, brings investment certainty to the Canadian economy in a way that is fair and balanced. It holds polluters to account, while distributing revenue back to Canadians, their communities, and protecting lower-income households. Pricing pollution incentivizes Canadian companies to innovate and build on our already thriving cleantech sector to ensure Canada remains competitive as the global economy changes.”

In a news analysis published hours after Trudeau’s announcement, CBC says the Liberals “learned the hard way back in 2008 that running a campaign around a promise to introduce a new tax is a recipe for electoral failure.” That was when party leader and environmental champion Stéphane Dion introduced an ambitious Green Shift program, but was “pummeled in that campaign” for his inability to show that the plan was revenue-neutral.

A decade later, “Trudeau is a better communicator than Dion,” CBC notes. “And climate change is a problem Canadians understand better today than they did 10 years back. They’ve witnessed the devastating aftermath of the severe storms, droughts, and forest fires that scientists attribute, at least in part, to a warming planet.”

But even so, “call it a price on pollution or call it a tax on everything—either way, politicians on both sides of the debate know that the best way to earn people’s votes is by leaving more money in their pockets,” writes National Affairs Editor Chris Hall. And “this is an argument only one side can win,” a reality Hall says Trudeau acknowledged by bringing the announcement to Ford’s riding.

“Let me be very clear. The government of Canada will return all of the money collected through pricing pollution back to Canadians,” the PM said. “Every nickel will be invested in Canadians in the province where it was raised.”