‘There is going to be a cost’: Federal carbon pricing to generate ‘net loss’ for most households, PBO finds

As the pricing increases, lower income households should continue to receive rebates, but middle- and upper-class households should be expecting to pay hundreds, if not thousands

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The latest findings from the Parliamentary Budget Officer are fueling arguments that the federal price on carbon is an economic burden for families — and could only increase in years to come.

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According to a report released on Thursday, PBO Yves Giroux concluded that most households in Alberta, Saskatchewan, Manitoba and Ontario will see a “net loss” resulting from federal carbon pricing in 2030. By then, the carbon levy will have increased to reach $170 a ton.

“The moment you decide to decarbonize the economy in a relatively short period of time — and we’re talking here less than 10 years to significantly reduce greenhouse gas emissions — it’s clear that there is going to be a cost,” said Giroux in an interview with the National Post.

As the carbon pricing increases, lower income households should continue to receive rebates, but middle-class and upper-class households should be expecting to pay hundreds, if not thousands according to the PBO, depending on their carbon consumption.

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In Alberta, the PBO expects that lowest-income households could expect to receive up to $246 back in their pockets this year, but highest-income households can expect to pay up to $1,925. In the end, Albertans will end up paying $507 per household on average.

In 2030, the PBO calculated that these same households in Alberta could be receiving $660 or paying up to $7,402. The net loss on average would be $2,282 per household.

The range is not as great in the three other provinces analyzed in the PBO’s report, but is still significant.

In Ontario, this year, lowest-income households could get back $150 this year and the highest-income households would be paying $1,137. In 2030, lowest-income households could get back $460 and those with a higher income could pay up to $4,866 for carbon.

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The federal government is set to raise the price on pollution on April 1 to $50 per ton of greenhouse gas emissions. The price will afterwards be rising $15 per year over the next eight years until it reaches $170 per ton in 2030.

This is the first time that the PBO calculates what would be the impacts of a $170 per tonne price on carbon on households — whether it be for gas, for heating or for electricity.

Giroux included in the calculations the GST paid on these amounts, and also the assumption of a more sluggish economic growth with carbon pricing. His calculations do not include the economic and environmental costs of climate change, nor does it try to.

“There could be potential benefits, for example, by mitigating the impact of climate change or fostering the development or adoption of new technologies, but to expect these benefits to be realized before 2030-2031 is… wildly optimistic,” said Giroux.

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“There’s also a cost of doing nothing, but this cost is very difficult to assess,” he added.

Earlier this week, Finance Canada released its own estimates of the increased Climate Action Incentive Payments for the year to come. The department expects a family of four to receive $745 in Ontario, $832 in Manitoba, $1,101 in Saskatchewan and $1,079 in Alberta.

In a video, Environment Minister Steven Guilbeault even boasted that “eight out of 10 households in Canada are better off with the application of carbon pricing than without.”

Conservative Party of Canada leadership candidate Pierre Poilievre jumped on the PBO’s findings on Thursday to declare in a press release that what Guilbeault was saying was a “lie” and that the price on carbon is “way worse than we thought.”

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“Today’s PBO report proves what Canadians already knew. This tax is costing them. And combined with ‘Justinflation’, they just can’t take it anymore.”

Giroux shrugged when informed that his report was used for partisan purposes.

“I don’t really have anything to say to people who want to use any of our reports for political arguments. The point of any of our reports is to provide unbiased, nonpartisan information and analysis to parliamentarians so that they can have an informed debate,” he said.

“We don’t take partisanship into consideration when we draft our reports. We focus on the numbers and the evidence that is available to us.”



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