By Ketki Saxena
The Federal Carbon tax is set to increase 25% today, up to a total of $50 per tonne of emissions. For Canadians, this means that fuel is set to become more expensive across Canada (except in Alberta - but more on that a minute later). The carbon tax amounts will add an additional 2.21 cents per litre of gasoline and 2.68 cents per litre of diesel.
The rise in carbon pricing is part of the Federal Government's ambitions to curb greenhouse gas emissions by 40-45% by 2030. Carbon pricing is a cornerstone of this target, and is set to increase more than triple by 2030, to $170 per tonne of emission.
As estimated by the Canadian Taxpayers Federation, the federal carbon price, including today's increase, now costs Canadians a total of 11 cents per litre for gasoline, 13 cents per litre of diesel and 10 cents per cubic metre of natural gas.
Provincial Regulations
Consumers in Alberta, Saskatchewan, Manitoba and Ontario, which do not have provincial carbon pricing policies, will receive federal tax credits to compensate for higher prices.
Environment and Climate Change Canada estimates that in 2022-23, the rebate for a family of four will amount to:
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$745 in Ontario
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$832 in Manitoba
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$1,101 in Saskatchewan
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$1,079 in Alberta
Canadians in rural areas of these provinces will receive 10% more than those in urban areas. Gasoline and diesel will also be exempt from the tax if purchased for farm operations, but farmers will still be hit by the tax on propane.
Alberta Fuel Tax Relief
Interestingly, the Alberta government has stopped collecting the provincial fuel tax, also from today. The tax will henceforth operate on a sliding scale, with no tax in effect when WTI is over US$90 per barrel, and in full effect when it is below US$80 a barrel.
The fuel-tax relief was designed to give Albertans a 13-cent-per litre discount at the gas pump, but will be partially offset by the increase in the Federal tax. In effect, Albertans should see a 10-cent-per-litre drop in gas prices from today.
As of 1:30 p.m ET, the WTI spot price was at US$ 100.93 a barrel, while WTI futures for May were trading at US$ 99.75 a barrel.