EDITORIAL: Trudeau’s carbon tax -- the good, bad and ugly

The good news is Prime Minister Justin Trudeau’s government will start sending tax-free money to Canadians living in Ontario, Alberta, Saskatchewan and Manitoba on Friday to help pay for their increased cost of living due to Trudeau’s carbon tax.

The bad news is Parliament’s independent, non-partisan financial watchdog, Yves Giroux, says even with these carbon tax rebates, most people will end up worse off financially compared to Trudeau’s carbon tax.

Ottawa says 80% of households will receive more in climate action incentive payments (CAIPs) than they pay in carbon taxes in the four provinces where Trudeau imposed them because he wasn’t satisfied with their provincial governments’ plans to reduce greenhouse gas emissions.

But Giroux says when the full costs of Trudeau’s carbon tax are considered — including its negative impact on economic growth, labour incomes and business investment — 60% of households will pay more in carbon taxes than they get in rebates this year.

The amount people receive — previously a refundable tax credit and now automatically distributed as a cheque or bank deposit to anyone who filed their income taxes last year — depends on the province where they live and the size of their household.

Ottawa says the average Ontario household will receive $712 in CAIP payments this year (half on July 15, followed by quarterly payments on Oct. 15, 2022 and Jan. 15, 2023) while paying $578 in carbon taxes for a net gain of $134.

In Alberta, $1,038 in CAIP payments while paying $700 in carbon taxes for a net gain of $338.

In Saskatchewan, $1,053 in CAIP payments, while paying $734 in carbon taxes for a net gain of $319.

In Manitoba, $788 in CAIP payments, while paying $559 in carbon taxes for a net gain of $229.

After Jan. 15, 2023, CAIPs will be distributed quarterly as Trudeaus’s carbon tax rises from $50 per tonne of emissions this year to $170 in 2030.

People living in small and rural communities are also eligible for a 10% top-up in CAIPs.

But Giroux says when you work out the full economic cost of Trudeau’s carbon tax versus the CAIPs, the average household in Ontario will end up $360 in the hole this fiscal year, Alberta $671, Saskatchewan $390 and Manitoba $299.