A poll last fall from the Angus Reid Institute found that 42 per cent of Ontarians said that they had never received a carbon tax rebate, or were unsure if they had. I don’t blame them for being confused. The feds have returned billions of dollars worth of carbon-levy cash over the past couple of years, but the evidence that you got paid is not easy to find.
I logged into my bank account to look for traces. On Jan. 15, I received my final quarterly payment of 2023, worth $122. The notation says: “Deposit Canada.” It’s the same as is attached to a tax refund.
So I went to the Canada Revenue Agency’s “My Account” page, where you can access things like your past tax returns and see a record of all communications from the CRA. Since 2016, I’ve received 21 messages.
Two are listed as “Canada Carbon Rebate Notice.” Clicking on the most recent one, dated April 14, 2023, brings up a document titled “Climate action incentive payment (CAIP) notice.” That’s the bafflegab moniker the carbon rebate carried until a few weeks ago.
Page one of the letter, signed by Bob Hamilton, Commissioner of Revenue, says my “annual CAIP entitlement is $488.” What does that mean?
Page two explains: “The climate action incentive payment (CAIP) is a tax-free amount that ensures that carbon pollution pricing remains affordable for Canadians. All direct proceeds from the federal carbon pollution pricing system are returned to the jurisdiction where they were collected, with most proceeds returned directly to individuals and families through CAIPs.
“You are not eligible to receive the Ontario Climate action incentive rural supplement for April 2023 to January 2024 because you live in a census metropolitan area.”
If you’re one of the millions of people in the dark about the rebate system, that leaves you none the wiser.
In fairness, selling the public on government policy is not the CRA’s job. It’s the government’s job. But a Trudeau government that routinely focuses on comms and falls down on policy execution did the reverse here, building an omnipresent carbon tax collection plan while minimally communicating the money-back part of the bargain.
In the eight provinces where the federal carbon tax applies – British Columbia and Quebec took the option of running their own systems – about 80 per cent of people can expect to get back more than they pay. The tax is paid based on how much carbon you consume, but rebates are based on family size. In Ontario, a family of four will get a $1,120 rebate in 2024. In Alberta, where carbon fuel use is higher, the same family will get $1,800. There’s also a supplement for rural residents.
But is it possible for the average person to easily calculate how their carbon tax rebate compares to their carbon tax payments, and whether they’re coming out ahead? No. Or how certain actions – a more fuel-efficient car, switching a furnace for a heat pump, whatever – would affect their carbon tax bill? No.
The result is that the pain of paying the tax is brightly illuminated, while the benefits of the rebates are hidden in the shadows.
Alternatives to the carbon tax do the opposite.
Take Quebec’s cap-and-trade carbon pricing system. Opacity is its political superpower. Most Quebeckers don’t know that they’re paying, and the money stays in provincial coffers instead of being rebated. A little ignorance buys a lot of political bliss. The cost of cap-and-trade has been a non-issue in Quebec politics.
Or take U.S. President Joe Biden’s Inflation Reduction Act. It has all kinds of programs to reduce emissions, without a consumer carbon tax. How do you get what looks like all benefits and no costs? Run a bigger deficit.
Subsidies, such as those that pay people to buy an electric vehicle or a heat pump, will lower emissions. However, the fiscal and economic costs may be higher than the carbon tax. And the distribution of costs can be unfair: A small number of people may get a big subsidy, while the rest of us pay.
If the carbon tax were axed, the funding for carbon rebates would disappear, and most Canadians would end up with less money in their pockets, not more. I pointed that out last year, and in the past week it has become the Trudeau government’s key talking point. It has the virtue of being true.
However, a future federal government could always axe the tax – but keep the rebate. Just put it on our collective tab.
Consider what Ontario is doing to lower electricity prices. It’s not a carbon reduction scheme, but it shows how government can abuse deficit financing to play postmodern Robin Hood. Instead of taking from the rich to give to the poor, you can take from nobody and give to everybody.
Between 2020 and 2039, Ontario plans to spend $118.1-billion on electricity subsidies, according to the province’s Fiscal Accountability Office. In 2022-2023 alone, Ontario spent $6.8-billion lowering the price of electricity below its cost. How did Premier Doug Ford’s government pay for that? With a budget deficit. Absent the subsidies, Ontario would have run a surplus.