Having had Prime Minister Mark Carney steal his favourite election pledge to ‘axe the [consumer carbon] tax’ — one that he had been polishing for more than a year — Conservative opposition leader Pierre Poilievre upped the ante today with a pledge should he become prime minister to axe the entire carbon tax law. That is, the industrial carbon tax is now going down, along with the more familiar consumer carbon tax that had hitherto been his sole target.
Excellent! (What took him so long?) Both are inflationary but while the federal government attempts a fiction that its rebate cheques cover what the poor old householder/driver pays under the consumer carbon tax — few people find that it does — the billions of dollars extracted from the consumer countrywide through taxes paid by large industry stay with governments. There is no program to return that to the consumer, and that was never the idea.
Budget documents show that in Alberta alone, large companies paid $907 million into the province's destination TIER Fund, during fiscal year 2023-24.
If you have wondered why inflation has torn such a hole in your all wallet, look no further. You paid for that.
However, much as we applaud Poilievre’s announcement this morning, it is not quite what he would like you to think.
A little context.
The consumer carbon tax is certainly a highly visible and costly irritant — it shows up as a line item on your power bill and at the gas pumps. And applied as it is at every stage of the production of goods and food at the rate of $80/tonne, it has driven up prices more than the federal government likes to admit. Not surprisingly, it is highly unpopular and Mark Carney was well-advised to make dropping this vote-loser dog his first substantial act. (Effective April 1st.)
However, even more inflationary is the less well frequently talked-of industrial carbon tax, known within the federal government by its anodyne disguise, the Output-Based Pricing System (OBPS.) Under federal legislation, individual provinces were obliged to either sign on to the federal OBPS, or design one of their own that met federal standards. In the end, most second-tier governments elected to design their own, including Alberta, B.C. and Saskatchewan. (Only Manitoba, Nunavut, Yukon and PEI did not.)
What Poilievre actually promisedmthis morning was that under a Conservative government, compliance with this federal legislation would now be optional for provincial governments. “Provinces will continue to have the freedom to address the issue as they like, but will have the freedom to get rid of these industrial taxes that the federal government has forced them to impose.”
To be sure, this is not quite putting the axe to the root. It does respect provincial preference, which is not something we’ve seen much of from Ottawa for ten years, so points for that. Nevertheless, it would make the premiers responsible for continuation of the industrial carbon tax.
That was cute. Now it'll be their problem, not his.
And a problem it will be. The premise of the federal legislation was that the tax revenues would stay in the provinces, and be funnelled back to local economies to reduce emissions.
Or more particularly, to industry. As the federal document states, “This money will help industries improve energy efficiency, use sustainable solutions and lower their carbon footprint as we work toward a low-carbon future.” In other words, a constituency now exists for these funds, which will squawk when/if a premier takes Mr. Poilievre up on his offer to stop charging the industrial carbon tax.
Nevertheless, Poilievre has fortified his position. Mr. Carney has only promised to scrap the consumer carbon tax, effective April 1. What he must now address, is what his industrial carbon tax — amplified to compensate for the foregone revenues of the consumer carbon tax — will cost.
Federal CTF Director Franco Terrazzano comments, “Under Trudeau, the industrial carbon tax was set to increase every year until it reached $170/tonne in 2030. While Mr. Carney has been vague, extending the current framework to 2035 would increase the industrial carbon tax to $245/tonne — more than 200 per cent higher than the current tax.”
It would appear then that given his public remarks, Mr. Carney seems to have every intention of increasing the industrial carbon tax. “So in changing the carbon tax … we are making the large companies pay for everybody,” said Carney in a recent speech.
But that’s where Carney is being a little cute himself. Large companies do not pay carbon taxes. They merely add it to the price of what you’re buying, pass it along, and in effect become tax collectors for the government.
Thing is, under Mr. Poilievre you will complain to your provincial government — hopefully in some cases, to a more sympathetic ear.