Canadians will pay more at the pump this year because of a little-known federal carbon levy buried in fuel regulations, according to new warnings from the Canadian Taxpayers Federation.The group is urging Prime Minister Mark Carney to eliminate what it calls a hidden carbon tax that will add as much as seven cents per litre to gasoline in 2026, driving up costs for families and businesses without offering any rebates.“Carbon taxes make life more expensive, hurt Canada’s economy and don’t work,” said Franco Terrazzano, the federation’s federal director. “Ottawa’s hidden carbon tax will cost families hundreds of dollars and blow a multi-billion-dollar hole in Canada’s economy.”The levy is embedded in federal clean fuel regulations that came into force July 1, 2023. The rules require fuel producers to lower the carbon intensity of gasoline and diesel. Companies unable to meet the standard must buy compliance credits, costs that are passed directly to consumers at the pump..Unlike the consumer carbon tax, there are no rebates attached to these regulations.Analysis by the Parliamentary Budget Officer shows the added cost will reach up to seven cents per litre of gasoline in 2026, rising to as much as 17 cents per litre once the rules are fully phased in by 2030.The PBO estimates the policy will cost the average household between $384 and $1,157 annually by 2030, depending on the province. Government figures also indicate the impact on Canada’s economy could reach $9 billion by the end of the decade.The budget officer has described the hidden carbon tax as “regressive for households,” noting that lower-income Canadians spend a larger share of their income on transportation and other energy-intensive goods than higher-income households.Terrazzano said Ottawa should abandon the policy altogether. “Carney should make life more affordable and get our economy firing on all cylinders by ending all carbon taxes,” he said.The PBO has also acknowledged that Canada’s emissions are too small on their own to materially affect global climate change, further calling into question the economic costs imposed by the federal fuel rules.
