Canada’s Carbon Tax Increase: What You Need To Know

Canada’s Carbon Tax Increase

The federal carbon price went up from $65 per tonne to $80 per tonne on April 1, 2024, costing drivers an additional 3.3 cents per gallon at the pump. But that’s not all. Numerous fuel sources that emit greenhouse gases are impacted by this surcharge, such as natural gas and propane.

Canada’s Carbon Tax Increase
Source: investbihar

What Is the Carbon Tax?

The goal of the carbon tax, which is imposed on the purchase of fossil fuels, is to incentivize Canadians to use fewer environmentally harmful fuels.

Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, PEI, Newfoundland and Labrador, Yukon, and Nunavut are among the states that impose the federal carbon tax. While Quebec has a cap-and-trade system, British Columbia and the Northwest Territories impose similar but separate consumer carbon levies.

In October 2019, the price on carbon, popularly known as the carbon tax, first went into force at a rate of $20 per tonne. Since then, the price has increased; on April 1, 2024, it hit $80 per tonne, up $15 from its prior price of $65 per tonne.

Up until 2030, the carbon price is expected to rise by an additional $15 annually, or $170 per tonne. This annual hike is meant to give Canadians more time to switch to greener fuels while also assisting Canada in meeting its emissions target.

Why Do We Need a Carbon Tax?

The United Nations states that the main cause of climate change is fossil fuels like coal, oil, and gas, which produce 90% of carbon dioxide emissions and more than 75% of greenhouse gas (GHG) emissions worldwide.

Global GHG emissions rose by 18.2% from 2005 to 2020. In other words, the globe is warming faster than it has ever warmed, and this warming impact is caused by growing greenhouse gas levels.

Why Is It Being Increased?

The carbon tax is set to rise by $15 per tonne until it reaches $170 per tonne in 2030. The tax was first imposed on April 1, 2019, at a cost of $20 per tonne.

(It raised to $10 per tonne annually from 2019 to 2022). With the objective of giving people and companies impacted by the tax time to modify their consumption patterns and transition to less polluting fuel sources, the rise is being implemented gradually over time.

How Does the Canada Carbon Rebate Help?

The Climate Action Incentive Payment, formerly known as the Canada Carbon Rebate (CCR), is a tax-free incentive designed to partially offset the expense of federal carbon pricing.

The CCR is available to citizens of Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan who are 19 years of age or older.

The province in which you reside and the number of family members living in your home determine how much you receive.

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