Carbon taxes have existed in Canada for greater than a decade, however they continue to be a fancy and infrequently complicated matter.
Alberta and Quebec adopted restricted types of carbon pricing in 2007, and British Columbia was the primary province to introduce a broad-based carbon tax in 2008.
Over the next decade, varied provinces adopted swimsuit with their very own carbon pricing techniques, with various levels of stringency and applicability.
Some provinces, equivalent to Alberta and Ontario, launched carbon pricing techniques below one authorities that have been later repealed by one other authorities. In Manitoba, plans for a carbon tax have been introduced in 2017 however then abruptly cancelled by the identical authorities in 2018.
In 2019, the federal carbon tax got here into impact. It applies in provinces and territories that don’t have carbon pricing techniques that Ottawa considers enough within the nationwide effort to scale back greenhouse fuel emissions.
The federal coverage — which incorporates each a tax on fossil fuels and rebates paid on to households — has been the topic of a lot political debate over the previous 4 years.
It has additionally been the supply of a lot confusion, which is comprehensible as a result of the coverage just isn’t precisely easy.
The federal carbon tax — and rebates — in a nutshell
The quantity you pay in carbon tax varies from gas to gas. Extra emissions-intensive fuels are topic to increased tax charges.
The quantity you obtain in rebates, in the meantime, will depend on three standards:
Your rebate is unaffected by how a lot gas you really devour.
That is what creates the monetary incentive to scale back your carbon emissions: your rebate is a set quantity, however you’ve some management over how a lot gas you utilize. The much less gas you devour, the much less tax you pay.
In case your gas utilization is under a sure degree, your rebate will exceed what you pay in tax. The federal authorities says 80 per cent of households get extra money again in rebates than they pay in carbon taxes, instantly.
In fact, that’s not the entire story. There are additionally oblique prices to contemplate. These are the carbon taxes paid by firms and handed alongside to you within the type of elevated costs on the products and companies you purchase.
Oblique prices are more durable to calculate exactly, however there are estimates from the Parliamentary Finances Workplace and the Sensible Prosperity Institute, a coverage think-tank primarily based out of the College of Ottawa, that give us a tough thought. These estimates differ relying on how a lot you spend and which province you reside in.
Right here, we’ve tried to simplify all of these items right into a single app.
The carbon tax calculator is a device that helps you get a greater sense of how the federal carbon tax is affecting your funds when all these components are mixed.
How do issues shake out to your family? Use the app under to determine that out.
Click on or faucet on the “i” icons for extra details about a specific element of the app.
(If the app doesn’t seem correctly in your cellular system, click on right here for a standalone model.)
A be aware for individuals in B.C., Quebec and the territories
This app solely works for individuals dwelling within the eight provinces the place the federal carbon tax applies.
The federal coverage doesn’t apply in British Columbia, which has had its personal broad-based carbon tax in place since 2008. Right here is extra details about the B.C. tax charges and the province’s local weather motion tax credit score.
Quebec has its personal carbon pricing coverage, too. The province has joined with California in a cap-and-trade system that sees greenhouse fuel emission credit purchased and offered on a carbon market.
The federal government of the Northwest Territories has additionally applied its personal carbon tax, which applies regionally as a substitute of the federal coverage. Listed here are extra particulars on the N.W.T. system.
The federal carbon tax does apply in Yukon and Nunavut, however the particulars of the coverage are a bit of totally different in these territories, specifically relating to the rebates.
Right here is Yukon-specific data and Nunanvut-specific details about how the rebates work in every jurisdiction.
How and if you get the rebates
The entire calculations within the app are primarily based on the present federal carbon tax price of $65 per tonne of CO2, which took impact on April 1, 2023.
The carbon tax follows the federal authorities’s fiscal yr, which runs from April 1 to March 31 of the next calendar yr.
The rebates are paid in April, July, October and January.
Nonetheless, the federal carbon tax didn’t take impact within the Atlantic provinces till July 1, 2023.
As such, Atlantic Canadians will solely pay the tax for three-quarters of the fiscal yr and can obtain three quarters’ value of rebate funds, as a substitute of the 4 quarterly funds that folks in Alberta, Saskatchewan, Manitoba and Ontario will obtain.
Residents of Nova Scotia, Prince Edward Island and Newfoundland obtain rebates in July, October and January.
In New Brunswick, which was a late joiner to the federal system in 2023, there shall be no rebate cost in July however there shall be a double cost in October, adopted by the common quarterly cost in January.
You obtain the funds the identical means you obtain your revenue tax refunds or different funds from the federal authorities. Typically, that’s by direct deposit into your checking account.
The official identify of the rebates are “Local weather Motion Incentive” funds. They could present up in your financial institution assertion as “CAI” or “CANADA” or “FED” or some mixture of these phrases.
To be able to obtain your rebate cost, you must file your annual tax return
The carbon tax price is ready to extend by $15 per tonne yearly, rising subsequent to $80 per tonne on April 1, 2024.
Rebates can even improve because the tax price will increase.
How this app works
The app incorporates information from varied official and impartial sources to calculate your family’s direct carbon tax prices, oblique prices and rebate quantities.
The direct value information come from the Division of Finance.
For the particular tax charges on varied fuels, see this hyperlink: Desk 1: Federal Gas Cost Charges for Listed Provinces.
For the rebates, the supply information additionally comes from the federal Finance Division.
Listed here are the particular rebate quantities for all of the provinces besides New Brunswick, and for New Brunswick, particularly.
Oblique prices: detailed methodology
The oblique value estimates come from two sources: the Parliamentary Finances Workplace (PBO) and the Sensible Prosperity Institute (SPI).
The estimates from the PBO come from the supplementary information supplied alongside its Distributional Evaluation of the Federal Gas Cost, which was printed on March 30, 2023.
The PBO shared this information upon request from CBC Information, however it’s unable to certify or endorse any impartial, exterior calculations made with the info.
The estimates from the SPI come from its carbontaxcosts.ca device, which is predicated on a working paper by economists Jennifer Winter, Brett Dolter and G. Kent Fellows.
The calculations of their paper have been initially carried out in 2020 {dollars} and primarily based on a price of $50 per tonne. Winter shared the underlying information and her recommendation in adapting it for the aim of this CBC Information app. The unique estimates have been adjusted to a price of $65 per tonne and for inflation in order that they’re reported when it comes to 2023 {dollars} on this app.
As a result of New Brunswick was a late joiner to the federal carbon tax, it was not included within the PBO’s estimates of oblique prices, so solely the SPI estimate is obtainable for that province.
Why do oblique prices differ by revenue and province?
The estimates of oblique prices from each the PBO and the SPI rely in your family revenue and which province you reside in.
Why is that this?
Revenue is used as a proxy for spending. Roughly talking, the extra money a family makes, the extra money that family is prone to spend. And the extra they spend, the extra they not directly pay by worth will increase within the issues they purchase.
Of their working paper, the SPI economists say “our oblique carbon value estimates are of the ‘worst-case’ selection since we assume full pass-through of carbon pricing prices from companies to households.”
The SPI and PBO estimates are each primarily based on revenue ranges. Within the SPI estimates, there are 10 discrete ranges of revenue for every province, every with a unique estimate for oblique prices. Within the PBO estimates, there are 5 discrete ranges.
This is the reason the indirect-cost estimates within the app don’t scale instantly if you change your revenue enter, however quite change abruptly if you move a sure revenue threshold.
The province you reside in additionally issues.
Because the SPI explains in its working paper, the estimates “rely on every province’s constructed atmosphere, electrical energy profile and consumption patterns.”
For many who actually wish to delve into the main points of what meaning: take a look at Appendix A close to the top of the paper.
For the remainder of us: it boils right down to the truth that worth will increase as a result of carbon tax will differ relying on the place individuals dwell.
Individuals in rural Saskatchewan, for instance, don’t spend their cash on the identical issues as individuals in downtown Toronto.
And even relating to similar merchandise, the value improve because of the carbon tax will differ from place to position relying on quite a lot of components, together with transportation-related prices.
App developed by Robson Fletcher, Nael Shiab, Robert Davidson, CBC Information Labs. Design by Wendy Martinez