Tax Required by the Federal Carbon Tax Plan
To estimate the cost to Canadians of the tax required by federal government’s carbon tax plan we used the CO2 emissions estimates from Canada’s Second Biennial Report on Climate Change submitted to the United Nations Framework Convention on Climate Change.
The federal plan requires a $10 per tonne price in 2018. With estimated CO2 emissions of 761 megatonnes in 2018, the tax will bring in $7.6 billion. The tax requirement increases up to $50 per tonne in 2022, and with emissions expected to be 774 megatonnes the tax will bring in $38.7 billion
The per person estimate is based on a 2016 Canadian population of 36.3 million. Based on the population growth estimates from the report to the UN (1% from 2013 to 2020 and 0.9% from 2020 to 2030), it is a tax per person of $210 in 2018 and $1,028 in 2022.
To get household estimates we use the average household size of 2.5 from the 2011 census. That means the tax will cost the average household $524 in 2018 and $2,569 in 222.
Updated: There are other estimates of how much the carbon tax will cost you, but here are some points to consider.
Some estimates assume the carbon tax will only cover around 70% of emissions. That assumes the tax will only cover stationary combustion sources and transportation, essentially burning fuel. However, those aren’t the only sources of carbon emissions, and the federal plan called for “Economy-wide carbon pricing”.
Other emissions could be covered, including leaks and emissions from cows (by the way it’s mostly the burps and the manure, not the farts). Lethbridge County already introduced a cattle head tax, it’s not a carbon tax but a similar per head carbon tax could be applied to cows. Just because provinces aren’t adding taxes like this yet doesn’t mean that they won’t or can’t. The carbon tax rate for fuels are based on average emissions released when they are used, and averages can be determined for other sources of emissions too.
Some estimates also only consider the costs to Canadian’s as consumers. We aren’t just consumers we are also employees and investors (often through pension plans). In the end, it's people who pay taxes, whether it's through lower wages, lower returns on investments, higher taxes or higher prices.
Lower estimates also assume the cost of the tax on exports will be passed on to foreign buyers. That assumes exporters can just raise their prices, and that won’t be the case in competitive markets. They may not be able to raise their prices at all if their competitors are located in countries without carbon taxes. If they can’t raise their prices, it’s employees and investors that will bear the cost of the tax.