In our last article we discussed the Supreme Court of Canada’s decision to back the federal government on its ability to set carbon pricing limits over the objection of three provinces that maintained this was usurping provincial constitutional rights.
But what is the impact of the carbon tax on your household costs?
Most visible is the price of fuel at the gas pump. The tax will add about 11 cents per litre for gasoline and diesel next year, growing to almost 40 cents by 2030.
If you heat your house with natural gas, oil or propane, you will see an impact there as well. However, there are other costs that are affected by the tax.
The good news is that there are climate action rebates to offset the increased costs.
The federal government maintains that the taxes raised will be revenue neutral with 90 percent being returned to Canadian households through rebates and tax deductions.
In Saskatchewan, for instance, the average estimated cost increase per household is estimated at $641 while the rebate is approximately $792 per household.
The tax is collected all year long but for now, at least, you can only claim the rebate on your tax return once a year. There are plans, however, to change to a quarterly payment system in the future.
In British Columbia, however, the rebates can only be claimed by households with a net income of less than $62,964 per year.
Although the rebate appears to exceed the costs calculated by the federal government, they do not include all impacts of the tax.
Let’s look at the direct impact of carbon taxing on the farm.
The government’s current plan is to raise the carbon tax to $170 per tonne by the end of the decade. That has an estimated impact on Saskatchewan wheat farmers alone (according to CBC financial news reports) of hundreds of millions of dollars that will only be marginally offset by government tax rebates. That significantly further reduces if not eliminates the producer’s already thin financial margins.
The farmer’s input costs are not exempt from carbon taxation, including rail and road transportation, electricity and grain drying. All will add costs to your grocery bill.
Other inputs that will be affected are seed, crop protection products, machinery parts, electricity needed for heat, irrigation and seed cleaning.
The cost of fertilizer is a major area of concern. In Alberta two common forms of fertilizer — urea and anhydrous ammonia — require natural gas in the production process. That means they will be loaded with the carbon tax.
Yes, you can get a partial rebate for your regular fuel and diesel costs, but currently you cannot for propane. The government says it has plans to add propane to the list subject to rebates.
The tax obviously is a work in progress so watch for additional changes in the years ahead.
Grant Diamond is a tax analyst in Saskatoon, SK., with FBC, a company that specializes in farm tax. Contact: email@example.com or 800-265-1002.