Households where carbon tax applies will be better off: PBO

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Contrary to what most Canadians believe, a new analysis by Parliament’s budget watchdog has found that most households in provinces where the federal carbon tax applies will receive more money back in rebates than they will pay through the scheme. However, that amount won’t be as projected last year.
“Under the federal government’s current rebate structure, most households will still receive more than what they pay in fuel charges,” parliamentary budget officer (PBO) Yves Giroux said.
“However, once the provincial and federal sales taxes on carbon pricing are accounted for, these amounts will be lower on a net basis when compared with the analysis in our previous report.”
Ottawa implemented a fuel surcharge last year of $20 per tonne of emissions on five provinces — Alberta, Saskatchewan, Manitoba, Ontario and New Brunswick — that did not have carbon-pricing schemes of their own. New Brunswick has since implemented its own tax.
The federal government has written into law that 90 per cent of the revenues collected from the fuel charge will be returned to individual households in the provinces where the revenues were raised.
In a report last April, the PBO estimated the carbon-tax costs and rebates for households in Saskatchewan, Manitoba, Ontario and New Brunswick, and found the majority would come out ahead. Alberta was excluded because the federal tax was imposed later on.
While the federal government has said the carbon tax will be revenue neutral, the PBO found it will raise about $100 million this fiscal year in additional GST because of the added cost on products, a figure that will triple by 2022-23 as the price of carbon rises to $50 per tonne.
Large and higher-income households will end up paying an amount as they tend to own larger homes and drive bigger cars. However, it tends to favor families with more children.

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