This week, new Prime Minister Mark Carney eliminated the consumer carbon tax in his first official act. While this may lower gas prices, experts indicate that the tax actually benefited many lower-income households financially. The carbon tax, applied as a surcharge on fossil fuel usage, aimed to reduce greenhouse gas emissions by altering consumer behavior. The federal Greenhouse Gas Pollution Pricing Act, implemented in 2018, included separate pricing for consumers and industry. While consumer taxes are now canceled, the industrial carbon tax, which incentivizes emissions reduction in producers, remains active.
This was a policy that was actually putting money in the pockets of lower-income households, in most cases.
By putting a price on carbon emissions, governments use market signals to incentivize changes in behaviour that otherwise might not happen.
The federal surcharge on gasoline was 17.6 cents per litre before it was removed on April 1.
The industrial carbon tax, meanwhile, remains in force. It's what's known as an output-based emissions trading system.
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