Does taxing us more change our bad habits?

Many industrialized countries have a carbon tax. Canada is a late adopter. What is the carbon tax? Why do farmers hate it? And how does it affect me an everyday consumer?

Hello Flatlanders,

Sometimes there are issues that come up in the news that affect us, but we don’t really pay attention to them for one reason or another.

We might hear something here or there, but never get a sense of how all the pieces fit together.

For me, that issue is carbon tax. My husband claims the rebate, so I’ve had no reason to think about it and I’ve only ever skimmed over the headlines when stories pop up about it.

But then I read one farmer paid $40,000 in carbon tax, and someone recently mentioned to me that we pay carbon tax every time we fill up our cars at the pump, which I had never realized, so I decided to look into it.

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What is the carbon tax? Why do farmers hate it? And how does it affect me an everyday consumer?

What is the carbon tax?
The carbon tax is charged to any person or business that uses carbon-based energy such as natural gas, diesel, and gasoline.

The purpose of the carbon tax is to push businesses and industry towards using more energy-efficient practices.
Many industrialized countries have a carbon tax.
Canada is a late adopter. Sweden implemented a carbon tax in 1991. Since the carbon tax was implemented 30 years ago, Sweden’s carbon emissions have declined, while economic growth has remained steady.
The tax is charged for every one tonne of greenhouse gases that is emitted into the atmosphere.
The agriculture and food processing sector produced close to 73 megatonnes of carbon dioxide emissions in 2019.
Collectively, farmers could pay $184 million annually in carbon tax by 2030.

Many farmers do not like the carbon tax even though climate change will have a huge impact on their businesses as the Prairies are expected to face more drought in the coming years. (See The Flatlander’s first issue Why snow is important to the local economy for more on this).
The carbon tax cuts into farmers’ profit margins. Each farmer pays tens of thousands of dollars in carbon tax depending on their operation.  
A push to green. Although expensive, some say carbon taxes incentivizes farmers who have refused to adopt more sustainable practices.
Prices going up. The carbon tax other businesses pay is passed onto the consumer, so the costs of machinery and parts farmers buy have gone up. The cost of electricity required for heat, irrigation, and seed cleaning has also increased.
Agriculture has a low profit margin. Farmers sell on the international marketplace where it is difficult to set their own prices as they can’t pass along the cost increase to the buyer and still compete with countries that have no plans to implement their own carbon pricing.
Putting Canadian farmers at a disadvantage, the cost of transporting grains is hit with the carbon tax.

Carbon tax exemptions. There are rebates available for farmers to help them to buy:

  • Equipment that improves energy efficiency
  • Grid-connected solar panel systems that can be used to generate electricity and reduce emissions of farms
  • New or upgraded low-pressure irrigation equipment, improving water efficiency, and reducing energy use

Additionally, the carbon levy does not apply to dyed diesel or gasoline used in farming operations.

Further help with these costs. The federal government recently announced there will now be a tax refund on money collected from carbon pricing on natural gas used by farmers.

This rebate plan won’t help because farmers will have to pay the carbon tax up front and then wait to be paid back, said Conservative agriculture critic and Member of Parliament John Barlow. In the meantime, some farmers could be bankrupted by the tax, he said.  

A new law may help. Earlier this month, MP Ben Lobb tabled Bill C-234.The bill expands the definition of farm machinery and would provide an exemption for qualifying farming fuel, like natural gas and propane.

Bill C-234 replaces Bill C-206 that died in the senate after the federal election was called last fall.  

Close up of gas pump nozzles. GETTY IMAGES.

I’m not a farmer, what does the carbon tax mean for me?

The carbon tax increases annually. This year the carbon tax has risen to $50 per tonne in 2022.

When we fill up at the pump, we are now paying 11 cents per litre in carbon tax.

The carbon tax will add about $44 per year to people’s power bill, according to Manitoba Hydro.

What each person pays in carbon tax depends on how much fossil fuel energy one uses. A person who drives more, or who must heat a large house, will pay more than others, who use transit or live in a small apartment.

The carbon tax is meant to nudge people towards driving more fuel-efficient vehicles or combining trips to the store to save gas. And when it comes to housing, it might mean installing a smart thermostat. Natural Resources Canada has a whole list of recommendations when it comes to making one’s home more energy efficient. The government agency also has tips on how to drive in a more fuel-efficient way.

Is the carbon tax constitutional? When the federal government developed its carbon framework in 2018, Saskatchewan, Alberta and Ontario tried to say imposing a carbon tax was unconstitutional. The Saskatchewan and Ontario appeals court said it was constitutional, while the Alberta appeals court ruled differently.

In the end, the matter went to the Supreme Court of Canada, which ruled implementing a federal carbon framework was constitutional because of the Constitution’s “peace, order and good government” clause, which gives the federal government jurisdiction over issues of “national concern.”

Manitoba launched its own legal fight against implementing a carbon tax, but in the end Premier Heather Stefanson dropped the issue and chose to negotiate with Ottawa instead last November.

At tax time, Canadians are eligible for the Climate action incentive (CAI) credit. Under this program, in Saskatchewan, a family of four can apply to get a rebate of  $1,189 for the 2021 tax year. Manitoba families of four can apply to receive $654 in carbon tax rebates this April, or rather $328 for the first adult, $164 for the spouse and $81 per child. 

Is Canada’s carbon tax working? Economists say its too soon to tell.

A smart home control. GETTY IMAGES.

Five stories from Manitoba you may have missed

  1. A Winnipeg woman performed at the Super Bowl this past weekend.
  2. Academics at the University of Manitoba have created a Reconciliation Barometer to measure progress toward reconciliation with Indigenous people in Canada.
  3. Canada’s Jennifer Jones continues her playoff push with a third straight win at the Beijing Olympics.
  4. In an effort to revive the fur industry in Manitoba and encourage more artisans to use fur, the Manitoba Metis Federation is making a $1 million investment.
  5. Four large agricultural companies are joining forces on a water management project intended to improve water quality and quantity on the eastern Prairies, by altering land, water and nutrient management on Manitoba farms.

Five stories from Saskatchewan you may have missed

  1. Unmarked graves were discovered at two former residential schools at Keeseekoose First Nation. Fifty-four hits of ground-penetrating radar were made on the grounds of the former Fort Pelly and St. Philips residential schools near Kamsack.
  2. Saskatchewan cannabis prices have plummeted since the product became legal in Canada in 2018. Research suggests that legal cannabis pricing has become competitive with that of illicit cannabis bought on the street.
  3. A retired Regina school teacher and singer-songwriter caught the attention of the Ottawa Citizen by writing a song that pokes fun of the truckers’ protest.
  4. People who ate at an Emerald Park Tim Hortons recently may have been exposed to hepatitis A.
  5. Former Crown prosecutor Harold Johnson who became a celebrated author has died.

Photo of the week

Winnipeg’s Dawn McEwen, Jocelyn Peterman and Kaitlyn Lawes of Team Canada compete against Team United States during the Women’s Round Robin Session on Day 12 of the Beijing 2022 Winter Olympic Games at the National Aquatics Centre on February 16, 2022 in Beijing, China. (Photo by David Ramos/Getty Images) 

Until next week…

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Thanks for reading, and kind regards,

Kelly-Anne Riess

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