The big lie about Canada’s carbon tax

Pop quiz: Why have seven provincial premiers come out against Justin Trudeau’s carbon tax?

1. They don’t know that four in five Canadians get more money from the rebate than they pay

2. They don’t care that four in five Canadians benefit financially because the tax is unpopular

3. They care more about the corporations and one in five Canadians who don’t benefit from it

4. All of the above

The federal price on pollution was first introduced by the Liberals in 2018 but was also a pillar of the Conservative platform in 2021 because economists agree that it’s the most effective, affordable, and least invasive way to reduce emissions and mitigate climate change.

But this bipartisan support for carbon pricing dissipated in 2022 when Pierre Poilievre became the Conservative leader. Ever since then, he and his party have been promising to “axe the tax” if elected – and, more recently, demanding that Trudeau’s Liberals “spike the hike.”

That’s because the carbon price is set to increase by $15 per tonne to $80 on April 1. For the average car, it’s an extra $1.82 per tank of gas, bringing the total cost to $5.68. And for the average home heated with natural gas, it’s an extra $5.68 per month, bringing the total cost to $30.31.

Meanwhile, the carbon rebate will increase from $488 to $560 for individuals and from $976 to $1,120 for families of four per year in Ontario (the rebate varies by province) while the top-up for rural Ontarians, who are more reliant on driving, will increase from 10% to 20%.

After accounting for both the carbon price’s direct effect on fuel prices as well as its indirect effect on the cost of other goods and services, the average Ontario household will still get $255 more from the rebate than they pay while the poorest 20% of households will get $335 back.

Poilievre’s response to this inconvenient truth has been to claim that the carbon price is causing inflation – and is therefore contributing to the affordability crisis. But this isn’t true either: According to the Bank of Canada, the carbon price contributes just 0.15% to the inflation rate.

Don’t believe the independent and nonpartisan Bank of Canada? Then how else would you explain why the country’s inflation rate was 5.9% in January 2023, when the carbon price was $50 per tonne, but was 2.9% in January 2024, when the carbon price was $65 per tonne?

Rather than acknowledge these facts, Poilievre prefers to repeat his “common sense” maxim that “when you tax the farmers who make the food and the truckers who ship the food then you tax the food itself.” But then why did grocery price inflation fall from 11.4% to 3.4% over the last year?

No answer from Poilievre. He’d rather assert that it’s Trudeau’s fault that “Canadians can't afford to heat their homes” while simultaneously claiming that Trudeau created “two classes of citizenship” when he decided to exempt home heating oil from the carbon price for three years.

But home heating oil costs around $43 per gigajoule (without the carbon price) in P.E.I., where per capita GDP is around $56,000; while natural gas costs around $12 per gigajoule (with the carbon price) in Saskatchewan, where per capita GDP is around $97,000. What’s fair about that?

That’s why Trudeau paused the price for heating oil and negotiated with provinces to cover the cost for low-income Canadians to switch to an electric heat pump. In P.E.I., that will save homeowners around $25 per gigajoule while helping to eliminate the most polluting type of home heat.

Poilievre doesn’t acknowledge this either. And by now we know why: He’s an anti-tax ideologue who fights on behalf of successful corporations. But why do so many Canadians share his view? Because of something else we know about Poilievre: He’s a highly effective communicator.

Poilievre has waged a relentless disinformation campaign. And his big lie has worked so well that Canadian premiers who surely know better are nonetheless demanding that the prime minister make most people in their provinces poorer… because they think it will help them get re-elected.

But that doesn’t change the facts. The fact is that Canada’s affordability crisis has nothing to do with the carbon price and everything to do with the housing crisis. And the reason housing costs are out of control is because provinces and municipalities haven’t built enough homes.

Of course, Poilievre blames Trudeau for that too. And, of course, it’s another lie. But it’s one that serves the interests of delinquent premiers. And, so far, people believe it.