Canada’s carbon tax is popular, innovative and helps save the planet – but now it faces the axe

As Prime Minister Justin Trudeau grapples with declining poll numbers, the opposition is ramping up efforts to persuade voters that environmental policies, particularly the carbon tax, are financially burdensome. Leyland Cecco reports from Toronto that Conservative leader Pierre Poilievre is making increasingly dire predictions about Canada’s future, attributing these woes to the federal carbon tax aimed at reducing greenhouse gas emissions.

In a recent address in the House of Commons, Poilievre asserted that calling an election focused on the “carbon tax” is the only way for Trudeau to avert what he termed an impending crisis.

Canada’s carbon tax has often been hailed as a progressive environmental policy success story, managing to cut emissions while also providing rebates to Canadians. Its framework has garnered bipartisan support from both conservative and liberal economists, surviving multiple federal elections and even a Supreme Court challenge. However, with a persistent cost-of-living crisis affecting citizens and Poilievre presenting a populist platform, the future of the carbon tax now faces renewed scrutiny.

Trudeau first rolled out the “pan-Canadian climate framework” in 2018, inspired by British Columbia’s pioneering carbon tax model. Notably, this policy is designed to be revenue-neutral. The government returns the money collected from the tax to taxpayers through quarterly rebates. Families in provinces like Ontario are expected to receive about C$1,120 in rebates this year, with rural families getting even more.

For those willing to modify their behaviors, there are significant financial incentives. Research by economists and political scientists, including Canada’s parliamentary budget officer, indicates that low-income households generally receive more from the rebates than they spend in additional costs. However, with the Conservatives leading in the polls, they are eager to capitalize on the growing discontent with the Trudeau administration, positioning the upcoming federal election as a referendum on the carbon tax. Their campaign slogan, “axe the tax,” highlights their argument that the levy intensifies financial pressure on Canadians already struggling with rising costs for rent, groceries, and transportation.

Kathryn Harrison, a political scientist at the University of British Columbia, has voiced concerns about what she describes as “outright falsehoods” leveraged for political gain. “The current political discourse creates confusion among Canadians regarding the real impacts of the policy,” she explained. “Many misunderstand its effects and feel they are paying more than they actually are. This confusion is troubling for both climate policy and democracy as a whole, as the unpopularity of the carbon tax largely stems from this misinformation.”

Environment Minister Steven Guilbeault emphasized the urgency of this debate, framing it as a pivotal moment for how Canada confronts the climate crisis. “It’s easy to say ‘axe the tax.’ No one enjoys paying taxes,” he said. “However, explaining that climate change is a real and costly issue for Canadians is far more complex. Carbon pricing is just one of several strategies we’re employing to tackle this, and conveying that nuance is much harder than promoting a catchy slogan.”

Guilbeault also pointed to a deeper issue, noting that discussions about climate and the environment have become intertwined with a broader cultural war, where facts are often sidelined. “This underscores fundamental challenges facing democracies around the globe, many of which are being eroded by campaigns of disinformation,” he remarked.

Other party leaders have also expressed interest in the perceived benefits of eliminating the carbon tax. Recently, New Democratic Party leader Jagmeet Singh raised concerns about how carbon pricing might burden working-class individuals—a claim experts have disputed. Harrison commented on this shift, stating, “It’s unexpected that the federal NDP would abandon such a progressive policy, which not only reduces carbon emissions but also provides greater rebates to low-income households compared to the taxes they incur.”

Guilbeault acknowledged that the federal government was “a bit slow” to address the misinformation surrounding the carbon levy, admitting that past elections have been fought over this topic. “We could have done better,” he reflected. Initially, the tax refunds were delivered in subtle ways that largely went unnoticed by taxpayers, only gaining clarity after legislative changes labeled refund payments as the “Canada Carbon Rebate.”

As the global community intensifies efforts to mitigate the climate crisis, findings from the Canadian Climate Institute suggest that the national carbon levy could potentially reduce emissions by up to 50% by 2030. Guilbeault warned that if a Conservative government were to abolish the carbon tax, there would be “no way” for Canada to meet its 2030 emissions targets. He stressed that such a decision would jeopardize Canada’s credibility in international negotiations aimed at emission reductions.

Dale Beugin, vice-president of the Canadian Climate Institute, pointed out that current discussions tend to focus on the consumer aspects of the carbon tax, while the industrial component, which could yield much more substantial reductions, receives less attention. Some opposition leaders, including Singh, have hinted at enhancing the industrial component to offset the losses from the consumer tax.

However, Beugin cautioned that eliminating the consumer tax would increase pressure to implement more aggressive measures elsewhere to meet emission targets. He noted, “When you eliminate one policy, you are inevitably forced to push harder on other fronts to address emissions, and many of those avenues—like buildings and vehicles—have already been thoroughly analyzed.”

The ongoing debate highlights the complex reality surrounding policies aimed at mitigating the long-term environmental repercussions of unchecked emissions. “Climate policy is inherently complicated,” Beugin affirmed. “It demands a commitment to overcome simplistic approaches that may be politically appealing. While technological advancements may offer solutions, the reality is that climate policy is challenging, and we cannot afford to turn away from that reality.”