A Reminder That The Carbon Tax Will Put Cash Back In Your Pocket

Canadians in four provinces — Saskatchewan, Manitoba, Ontario and New Brunswick — are well aware that they will see a gas price increase of about 4.5 cents starting April 1 as the federal carbon pricing “backstop” comes into effect. Between social media posts of Ontario Premier Doug Ford and his cabinet ministers filling up at gas stations, and receiving text messages from Conservative leader Andrew Scheer reminding them of the federal carbon tax, it would be hard not to be aware of the increase coming for gasoline and home heating costs.

But far fewer citizens in the four backstop provinces are aware that they are likely to be better off financially after the federal carbon price is in place. This is because 90 per cent of the revenue collected from the backstop will be returned to consumers and households as direct rebates, called the Climate Action Incentive, administered through the federal income tax system. The remaining 10 per cent will be returned to small- and medium-sized businesses, and institutions like schools and hospitals, that are also subject to the carbon price — but households overall will actually receive more back than they will pay in.

As Canadians in those four provinces fill in their tax forms or file online over the next few weeks, they may notice the Climate Action Incentive box. Checking that box — regardless of a taxpayer’s level of income or amount of tax owing — will mean that they will receive a bigger tax refund. The amount of the refund varies by province to ensure that all carbon taxes collected within each province stay in the province they came from.

For an individual in Ontario, it will be $154 for an individual filer, $231 for a couple or $307 for a family of four. In the more emissions-intensive province of Saskatchewan, where coal-fired power still provides most electricity, the rebates are higher: $305 for an individual, $457 for a couple and $609 for a family of four. For about 80 per cent of households, the rebate amounts will be more than the cost of federal carbon tax for the entire year.

When made aware of the federal income tax rebates, Canadians are much more likely to support the carbon tax. A poll conducted for Canadians for Clean Prosperity in Ontario’s Greater Toronto Hamilton Area (a key swing region in federal and provincial elections, heavily populated by commuters) by the Loewen Lab at the University of Ontario showed that 40 per cent of respondents surveyed support the federal government’s carbon price plan, 20 per cent say they could accept it and 28 per cent are opposed.

When asked if they would support the tax if all of the money collected was rebated to households and businesses, 47 per cent of those who were opposed switched to supporting or accepting the tax. When asked whether they would support the tax if they personally received back more money than they spent on the carbon price — as will be the case for about four out of five households — a full 60 per cent move from opposing to supporting or accepting.

Unfortunately, it seems that more people are aware that taxes are going up at the gas pump and on heating bills than they are that they will be getting an even bigger tax rebate. While most respondents in our poll knew about the federal carbon price coming into place on April 1, most were not aware that the revenues would be rebated to consumers. When asked how the revenues from the federal carbon tax would be spent, 60 per cent thought it was going to green infrastructure, like public transit. Only 40 per cent correctly identified that it would be rebated back to households and businesses.

The federal government has done the right thing for the environment in imposing a price on carbon — the lowest-cost, most effective way of reducing carbon emissions according to many economists and environmental policy experts. And they have done the right thing with the revenues by returning them to households and businesses rather than increasing government spending.

The government doesn’t seem to have gotten that message out to enough Canadians in the four backstop provinces. Residents in Saskatchewan, Manitoba, Ontario and New Brunswick may find themselves grumbling at the gas pump next week over the extra 4.5 cents per litre. Let’s hope they will find themselves pleasantly surprised when they sit down one evening to do their income taxes and realize that their refund will be $300 or more than they had expected.

Mark Cameron is Executive Director and Michael Bernstein is Senior Vice-President of Canadians for Clean Prosperity.

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