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New numbers show Trudeau's carbon tax doesn't leave you better off

Author: Aaron Wudrick 2021/01/11

The only claim less trustworthy than an email offering million-dollar prizes (just click the link to win!) is a politician’s promise that a tax hike will leave more money in your pocket.

 

So it should come as no surprise that the Trudeau government’s dubious claim that its carbon tax would leave Canadians better off has already been contradicted by one of its own official reports.

 

This week, the Trudeau government released its annual report on the carbon tax which clearly shows the federal government collected far more in carbon taxes last year than it actually rebated to households in those provinces. And it’s not a small sum: of the $2.6 billion taken from Canadians’ pockets, just under $2 billion was rebated.

 

Add to that hundreds of millions more in sales taxes the government collects on carbon taxes that aren’t being rebated.

 

How did this happen?

 

For starters, the government underestimated the burden their carbon tax was going to impose on Canadians. That’s troubling in itself, not just because it cost Canadians more money, but also because it suggests the government overestimated the behavioural response to higher taxes.

 

And because of those higher costs, the rebate amounts – which are set in advance – won’t offset as much of the cost for as many people.

 

Put another way, it’s a bit like being promised sufficient freezing to manage the pain of a root canal, only to discover after the fact that your dentist completely underestimated the required dosage.

 

So much for leaving Canadians better off.

 

Even a cursory glance at the Trudeau government’s track record suggests that such outlandish claims call for extreme skepticism.

 

This is, after all, the government that lied about its plans to raise the carbon tax past $50 per tonne by 2022, waiting until after the election and the middle of a pandemic to announce it would be jacking it all the way up to $170 per tonne by 2030.

 

Prime Minister Justin Trudeau also insisted as recently as August that “the last thing Canadians need is to see a rise in taxes right now.”

He’s absolutely right. Which is why it’s so mind-boggling that he’s decided to raise not just carbon taxes, but also jack up 
alcohol taxes and payroll taxes, while implementing a Netflix tax and a second, bigger national carbon tax in the form of the so-called clean fuel standard.

 

Critics will argue that the government can just increase carbon tax rebates in future years to make up the difference, which is a bit like prescribing more freezing for some point later in the dental surgery when the drill is already buzzing right to the bone.

 

Even worse, there’s no guarantee Trudeau won’t just change his mind and keep the money. It’s not a far-fetched hypothetical: we need look no further than British Columbia – often held up as the gold standard for carbon taxes in Canada – to see how formerly revenue neutral carbon taxes can quickly transform into run-of-the-mill tax hikes.

 

What are the odds that the Trudeau government – which has sent the federal debt soaring over a trillion dollars and seen a dramatic collapse in revenues during the pandemic – will be able to resist future temptations to grab untold billions in revenue that it literally already has sitting in its coffers?

 

Nobody can say for sure. But if you’re inclined to trust the feds on it, you should check your email spam filters – you might be missing out on millions of dollars in prizes.


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