Conservatives slam the carbon tax for adding to inflation, but fail to mention its rebates

After losing the legal battle against the federal carbon tax earlier this year, conservative politicians in Canada have been launching political attacks against the tax they love to hate. The strategy leverages broad public concern over inflation and energy costs.

The political narrative intentionally fails to mention the carbon tax is revenue-neutral. Rather than debate the carbon tax and explain what might be wrong with the rebates provided to Canadian households, the conservatives embrace the tools of misinformation and attempt to convince us it simply drives up the cost of living for people who are struggling to get by.

The federal Conservatives promise to scrap the carbon tax and thereby make all our lives affordable again. It’s a cunning attempt to link inflation to the carbon tax, but is this tax really a major driver of today’s inflation rate?

Taking gasoline as an example, the carbon tax is now 11 cents per litre, but it only increased by 2.2 cents per litre in April. The average gas price in Canada last April was $1.738 per litre, meaning the carbon tax added a 1.2 per cent increase to the price of fuel.

What about other day-to-day purchases, such as groceries? The carbon tax will have an even smaller impact on these items because fuel or energy costs associated with making and delivering a product are small in comparison with the labour, material, packaging and marketing costs.

However, the greatest deception is the failure to mention the rebates on the carbon tax. These are called Climate Action Incentive (CAI) payments and are now delivered to Canadian households every three months. The incentive payments vary between provinces, but I will use my home province of Alberta as an example.

My wife and I drive between 15,000 and 20,000 kilometres a year, based on the total distance of our two vehicles. We primarily drive a Toyota Yaris around the city, while our RAV4 Hybrid is mostly used for travel and trips to the mountains. Using an average fuel economy of 6L/100km, the 11-cent carbon tax translates to a cost between $99 and $132 per year.

We purchase natural gas from Alberta Co-operative Energy, which conveniently itemizes the carbon tax on our monthly bill. The total for the last 12 months was $251.27. We pay little carbon tax on electricity because we have solar panels on our house. In Alberta, we’re only allowed to install enough solar panels to zero-out our electricity usage for the year, plus or minus a small amount. Even though we have space for additional panels on our roof, we aren’t allowed to be a net generator for the year.

Our CAI rebate is $202.25 every three months, or $809 a year. That means we are making over $400 per year from the CAI. How is that possible? Consider that people who live in a 4,000-square-foot home and drive a minivan and a pickup will pay more carbon tax than the average Canadian household. Essentially, they’re paying for our benefit.

If you live in an apartment and take transit to work every day, then you will most likely receive a net benefit from the CAI. If you convert your home to net-zero and drive an electric vehicle, you should also receive a net benefit. It truly is an incentive to encourage us to reduce our carbon emissions or pay for the privilege of polluting.

The carbon tax is also an equitable tax because low-income households are less likely to drive gas-guzzling SUVs or own multiple vehicles. They are unlikely to live in sprawling single-family homes. As the carbon price increases, it will become harder for them to ignore that the CAI is rewarding them for consuming less fossil fuel.

A carbon tax is a clear and effective way to price carbon with the goal of reducing Canada’s greenhouse gas emissions. Economist William Nordhaus is a proponent of carbon pricing and was awarded the 2018 Nobel Prize for economics for his long-term work on the economics of climate change.

In his book, The Climate Casino, Nordhaus asserts that pricing carbon signals to consumers what products are more carbon-intensive, signals to producers what materials and energy sources are more carbon-intensive, and propels innovation to develop low-carbon products and energy solutions.

Is scrapping the carbon tax really the best form of tax relief to help Canadians deal with inflation? The recent tax cuts announced in the U.K. were certainly not well received by financial markets, and the government was quickly forced to backtrack on this policy. How will our trading partners view abandoning carbon pricing when we have committed to meeting the emissions targets of the Paris Agreement?

My suspicion is that there will be no price on carbon under a Conservative government. Period. Perhaps conservative politicians and their patrons live in much larger homes than we do. Maybe they fly more and drive multiple gas-guzzling vehicles. There’s nothing wrong with that, but it might explain why they don’t like paying carbon taxes while low-income or energy-efficient households are making money on rebates. To them, it’s just not fair.

Rob Miller is a retired systems engineer, formerly with General Dynamics Canada, who now volunteers with the Calgary Climate Hub and writes on behalf of Eco-Elders for Climate Action. As a climate activist, he works to stop old-growth logging in B.C., to reject coal mining on Alberta’s eastern slopes, to facilitate community involvement in urban afforestation, and to advocate for renewable energy. Miller uses a “systems-thinking” approach to learn, understand, and defend the ecosystems that are under threat by climate change and unrestrained resource development. He lives in Calgary.