In 2018, the Canadian government took action to fight excessive greenhouse gas with the introduction of the Greenhouse Gas Pollution Pricing Act. The Act imposes a charge, the so-called Carbon Tax, which is applied whenever a province does not have its own pollution tax that meets federal standards. So what is the carbon tax, and how does the carbon tax work with different provincial and territorial taxation systems?
Please read further to find out about carbon tax in Canada in 2020 and to find out how to claim the carbon tax rebate: we’ll focus primarily on carbon levy, which is the carbon tax component applied to fuel purchases made by families and small businesses.
Alberta wasn’t included in the program until January 2020, at which time Carbon Tax was $20 per tonne of GHG emission with a further increase on April 1st by an additional $10. This is why the 2020 taxation period for Alberta consists of two parts: Jan – Mar 2020 at $20 per tonne and Mar 2020 – Mar 2021 at $30 per tonne. This period of 15 months entitles Albertans to a rebate of $888 for a family of four: $444 and $222 for the first and the second adult respectively, and $111 per child.
Earlier in 2020, the BC government planned to increase BC carbon tax from $40 per tonne of carbon emissions to $45, which was due in April. However, at the end of 2020, the amount of charge remains $40 until its next planned increase to $45 in April 2021. Families with net income under $62,964 can get the tax reimbursed as part of their tax return in the amount of up to $154 for an adult and $45 for a child.
As of the beginning of 2020, Manitobans had to pay the federal tax, which entitled them to rebates. An average rebate that families in Manitoba will receive is $ 486: $170 and $85 for the first and the second adult respectively, and $42 for a child. However, on July 1st, 2020, Manitoba introduced their Made-in-Manitoba Climate and Green Plan that charges only half of the federal tax coming down to extra 5 cents a litre instead of 10.
As of the start of 2020, New Brunswick was subject to the federal carbon tax. However, they introduced their own carbon taxation system in April 2020. What this means to the province residents is that they will have to pay only extra 2 cents per litre of gas instead of the 4.4 cents charged this period by the federal system. At the same time, consumers will no longer receive rebates on federal carbon tax.
The province charges $20 per tonne of emissions set out by the federal government, which was introduced to the province in January 2019. At the same time, Newfoundland and Labrador reduced gas tax to offset the federal carbon levy, so consumers didn’t suffer drastic gas price hikes. Although on Nov 7, 2020, the gas tax was increased by 2 cents a litre.
In January 2019, Nova Scotia introduced a cap-and-trade system aimed at reducing greenhouse gas emissions, meeting the federal standards. This approach allows trading emission allowances between emitters, thus helping reduce overall over-the-province emissions over time. For consumers, it means just an extra 1 cent per litre of gas instead of 11 cents that the federal government expects to see by 2022. Since it is an in-province system, federal carbon tax rebates do not apply.
Earlier in 2020, Ontario adopted its own carbon tax program. According to it, consumers pay extra 4.4 cents a litre of gas in 2020, which is planned to be raised up to 11 cents by 2022-2023 tax year. The rebates Ontario residents are entitled to average around $448 for a four-member family. That’s $224 for a single adult, $112 for a second adult in a couple, and $56 for each child.
Similarly to what Newfoundland and Labrador did, P.E.I. made a decision to introduce their own provincial carbon levy at $20 per tonne on most fuels except furnace oil and propane. Also, the province has the gas tax reduced to compensate for the federal carbon levy. Residents of P.E.I. are not entitled to a rebate, and all funds are intended for environmental initiatives.
Quebec has had its own cap-and-trade program since long ago. The program primarily focuses on maintaining caps on greenhouse gas emission at the industrial level. This allows consumers to pay around extra 3 cents a litre, which is significantly lower than what the federal program offers. Obviously, Quebec residents should not expect any rebates as the province does not participate in the federal program.
While Saskatchewan was among provinces that opposed the federal carbon tax, its residents currently have to pay the federal carbon levy. Being taxed on gasoline, Saskatchewan consumers are entitled to a rebate: four-member families can receive $809 in 2020, which is $200 more than it was last year.
Yukon joined the federal program with a $20 per tonne charge, but all revenues go to Yukon. In Yukon, families of four can expect about $172 in rebates. Nunavut is also in the program, but it covers half of the carbon levy for consumers. No rebates are offered. Northwest Territories also charge the standard $20 per tonne, which feels much better with a 100% rebate on home heating and a cost-of-living benefit of $156 per adult and $180 per child.