Moe Halt Carbon Tax amidst Trudeau and NDP’s Increase Plan

Nikita Pradhan
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Despite appeals from several provincial premiers, Canada’s carbon price is scheduled to increase in April.

The carbon price, deemed a fundamental policy by Prime Minister Justin Trudeau’s minority Liberal government, is facing resistance from leaders like Newfoundland and Labrador Liberal Premier Andrew Furey due to concerns about affordability.

The specific amount by which the carbon price will increase has not been disclosed. What you should know is as follows:

Reasons for Increasing Carbon Price:

The upcoming April 1 carbon price hike is not unexpected, according to Hadrian Mertins-Kirkwood. The rationale behind implementing a carbon price is to reduce fossil fuel usage, thereby lowering overall emissions from the economy.

This approach involves annual increases as part of the government’s broader pricing scheme, with planned increments continuing until at least 2030.

Trudeau Confirms He Will Not Take Down Tax Hike

Provinces and territories have the option to voluntarily adopt the federal pricing system. However, if they choose not to price carbon pollution or propose a system that falls below the minimum national standards, they are subject to the federal pricing system to ensure consistent pricing across Canada.

Currently, British Columbia, Quebec, and the Northwest Territories have their carbon pricing systems in place.

The carbon price increase will be reflected in:

The planned April 1 increase will be most noticeable at the gas station and on energy bills in provinces and territories where the federal backstop plan applies, according to Mertins-Kirkwood.

He notes that while the carbon price hike will impact energy bills, its effect is relatively small compared to other factors such as global oil prices or corporate profitability. Mertins-Kirkwood suggests that concerns about household affordability due to the carbon price alone may be exaggerated.

Additionally, Canadians may experience “indirect effects” of the carbon price, particularly through transportation costs that can influence food prices. Despite this, inflation in Canada has been cooling, with Statistics Canada reporting a decrease from 8.1 per cent in June 2022 to 2.9 per cent in January.

Food inflation at grocery stores also decreased to 3.4 per cent from 4.7 per cent in the previous two months. However, prices of food purchased from restaurants increased by 5.1 per cent annually in January, down slightly from 5.6 per cent in December, according to the agency.

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Premiers are calling for an April 1 pause in the carbon price increase

Premiers, including Newfoundland and Labrador’s Andrew Furey, express concerns to Trudeau over the planned carbon price increase, citing worries about mounting financial strain on families. Ontario’s Doug Ford, Alberta’s Danielle Smith, and Saskatchewan’s Scott Moe signal support for Furey’s call, emphasizing the need to alleviate financial burdens on households.

Manitoba’s Wab Kinew also seeks a reevaluation of the federal carbon price application, though changes may take up to three years. Furey urges Ottawa to pause the increase until inflation and cost-of-living pressures subside.

Federal Conservatives, led by Pierre Poilievre, criticize carbon pricing, pledging to remove it if they come into power. Trudeau defends the price on pollution, emphasizing its role in signaling investment in emissions reduction while protecting middle-class and vulnerable families.

Hadrian Mertins-Kirkwood notes that a pause wouldn’t significantly improve affordability for most households, and disrupting the carbon pricing schedule could impact investment decisions and the economy.

The specific amount by which the carbon price is set to go up

The carbon pricing plan is currently set at $65 per tonne. Effective April 1, it will increase to $80 per tonne and continue rising annually by $15 until it reaches $170 per tonne by 2030.

At the gas pumps, the April 1 hike will add approximately three cents to the cost of gas, according to Mertins-Kirkwood. However, he notes that this increase is relatively small compared to typical fluctuations in oil prices.

Part of the government’s carbon pricing system includes the Canada Carbon Rebate, previously known as the climate action incentive payment. Ottawa rebranded the program in February, providing quarterly tax-free payments to eligible Canadians.

Approximately 80 per cent of Canadians receive more from the rebates than they pay in carbon pricing, impacting provinces where the federal carbon price applies.

Mertins-Kirkwood describes carbon pricing as a policy that appears beneficial on paper but faces challenges in practice due to its perceived political drawbacks. He argues that the discussion around carbon pricing can distract from addressing more pressing issues such as housing affordability and public transit investment.

Last Updated on by Nikita Pradhan

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