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Carbon tax ramifications remain unclear

Posted on January 12, 2017 by Vauxhall Advance

Alberta’s carbon tax is now a reality, with the levy being implemented as of Jan. 1. The effects of the tax showed up immediately with prices at the pumps taking a sizable jump.

The amount of the carbon levy added to gasoline was 4.5 cents per litre, but locally that hike followed a six-cent increase at some gas stations just before the new year, meaning the price at some pumps is 10.5 cents per litre higher than it was before the new year, suggesting there are other factors involved than just the carbon tax.

It remains to be seen how that will affect the cost of other goods and services as the trickle-down effect takes place. The predictions in that regard are wide-ranging. The Canadian Taxpayers Federation estimated a carbon tax would mean an annual hit of $2,500 to the average household’s wallet.

Saskatchewan Premier Brad Wall has said the additional costs would be $1,250 per year.

A Maclean’s magazine article in October noted Alberta government estimates were suggesting indirect costs of $100 to $200 per year for the average household.

The Trudeau government, which had been pressuring provinces to put a price on greenhouse gas emissions or the feds would do it for them, hasn’t offered much in the way of projected costs to Canadian households.

The Notley government’s carbon tax was introduced with good intent as part of the government’s Climate Leadership Plan and to ensure Alberta would not have to settle for an emissions solution imposed by Ottawa.

In November, when a series of rallies took place in a number of communities across the province to oppose the carbon tax, Environment Minister Shannon Phillips said the opposition was fuelling Albertans’ concerns with “a lot of mistruth.”

Phillips said the costs to Albertans and to the economy were being exaggerated and pointed out that two-thirds of Albertans will receive rebates that will be paid out from the carbon levy.

The rest of the carbon tax money will go toward investments in energy efficiency for homeowners and small business owners, and to investments in innovation and technology, “keeping those good jobs right here in Alberta, and cleaning up our air and getting rid of dirty coal plants. That’s what we are re-investing that price on pollution in.”

B.C. has had a carbon tax since 2008, and while some commentators say its effect has been negligible, an article in the Globe and Mail in July 2014 said according to figures from Statistics Canada, “B.C.’s policy has been a real environmental and economic success after six years. Far from a being a ‘job killer,’ it is a world-leading example of how to tackle one of the greatest global challenges of our time: building an economy that will prosper in a carbon-constrained world.”

Certainly we in Alberta can expect to see the carbon tax push up the prices of goods and services, since higher transportation costs will have an impact on businesses.

But the October Maclean’s article said according to a study by University of Ottawa economist Nic Rivers, the effect on consumers is “fairly small – only a few per cent for most non-energy items.”

Albertans will be hoping that analysis is correct. Suffice to say that with Alberta’s carbon tax now in place, we will start to see how it all shakes out – and just what impact it has on Albertans, and on the province.

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