The total cost of a carbon tax across Canada will be $35 billion per year, according to a leading expert in the field.
While a recent Parliamentary Budget Officer report stated that a $50 per tonne federal carbon — the mandated price by 2022 — will end up costing the economy $10 billion per year, that’s the eventual negative hit to the economy after certain rebates are applied. It’s not the raw cost charged on emissions.
Canada currently emits approximately 700 million tonnes of emissions annual. A price of $50 per tonne placed on these emissions comes to $35 billion.
It’s a basic calculation that’s hidden in plain sight but practically never cited in reports and rarely brought up in the national discussion currently underway about the pros and cons of Prime Minister Justin Trudeau’s carbon tax.
This figure was explained by Christopher Ragan, an economics professor at McGill University, on the SiriusXM Canada program National Post Radio. Ragan is also chair of Canada’s Ecofiscal Commission, the leading independent policy group in the country that researches and advocates carbon pricing.
The $10 billion cited by the PBO actually explains the drawbacks to the economy after many more billions than that are raked in and then returned in the form of giving Canadians a rebate in the form of cheques.
This is not the most efficient model for growing the economy, Ragan argued. “The best way, if you really care about economic growth,” said Ragan, “is that you use the revenue from a carbon price to reduce the most growth retarding tax we have, which is a corporate income tax.”
While this approach may spur the best economic growth, it would essentially mean transferring billions from the wallets of individuals into the coffers of corporations.
The national carbon tax has become increasingly controversial in recent months. While Manitoba premier Brian Pallister has implemented a $25 per tonne carbon tax in his province, he’s vowing to fight the federal government’s plans to double that. Meanwhile, federal Conservative leader Andrew Scheer and provincial leaders Jason Kenney and Doug Ford have come out swinging against, bringing public opinion with them.
Ragan still sees the carbon tax as beneficial to the country because of the lowered emissions the Ecofiscal Commission projects it will bring about. “You’re getting something for this policy,” he says. “That’s reduced emissions. Six per cent in five years — that’s pretty substantial.”
It’s presumed the carbon tax will be passed on to consumers in the form of higher prices on not just gas and home heating but various other products and services that produce emissions. Despite the many studies exploring the merits of carbon pricing, there are few projections as to what this will cost the individual.
Conservative finance critic Pierre Poilievre has been calling on the government to release a report by Finance Canada that has done just that. When Poilievre received the report via an access to information request, the tables listing the carbon tax projections was blacked out. This secrecy is usually only applied for issues such as national security or when personal information is revealed.