The federal carbon tax is now in effect in Saskatchewan, Manitoba, Ontario and New Brunswick. The tax increases the cost of fossil fuels in order to reduce consumption, thus lowering Canada’s carbon emissions.
Many Canadians are confused about the carbon tax and how it will affect them. Here are some answers to common questions about this new tax.
What is a carbon tax?
A carbon tax is a levy applied to fossil fuels based on how much carbon dioxide they release when burned.
Coal, for example, releases more carbon pollution than natural gas to produce the same amount of energy. The federal carbon tax will raise the price of coal more than the price of natural gas.
The carbon tax doesn’t apply to hydroelectricity and other energy sources that don’t release any carbon pollution.
Why is the tax being applied in only four provinces?
The federal and provincial governments (with the exception of Saskatchewan) previously agreed to establish a consistent Canada-wide price on carbon pollution. The agreement gave provinces flexibility to devise their own policies, as long as they covered the same sources at the same carbon price. If they didn’t, the federal government would step in.
In 2018, all provinces satisfied the federal government’s conditions except for Saskatchewan, Manitoba, Ontario and New Brunswick, where the federal “backstop” carbon tax is being applied. MORE