Canada passed a carbon tax that will give most Canadians more money

(The Guardian, 26 Oct 2018) By rebating the revenue to households, disposable income rises, which can be a boon for the Canadian economy.

Last week, Prime Minister Justin Trudeau announced that under the Greenhouse Gas Pollution Pricing Act, Canada will implement a revenue-neutral carbon tax starting in 2019, fulfilling a campaign pledge he made in 2015.

The federal carbon pollution price will start low at $20 per ton in 2019, rising at $10 per ton per year until reaching $50 per ton in 2022. The carbon tax will stay at that level unless the legislation is revisited and revised.

This is a somewhat modest carbon tax – after all, the social cost of carbon is many times higher – but it’s a higher carbon price than has been implemented in most countries. Moreover, a carbon tax doesn’t necessarily have to reflect the social cost of carbon. The question is whether it will be sufficiently high to meet the country’s climate targets.

Paris was a key motivator behind the Canadian carbon tax

The Preamble in the Act is worth reading. It begins by noting “there is broad scientific consensus that anthropogenic greenhouse gas emissions contribute to global climate change” (this is somewhat understated – carbon pollution is the dominant factor). It also notes that Canada is already feeling the impacts of climate change through factors like “coastal erosion, thawing permafrost, increases in heat waves, droughts and flooding, and related risks to critical infrastructures and food security.”

External link

The Guardian, 26 Oct 2018: Canada passed a carbon tax that will give most Canadians more money