Canada’s Carbon Taxes

Laser Talk

Question: Has any other national government imposed a carbon tax with dividends?

Answer:  Yes – Canada.

It started with the Canadian province of British Columbia, which took the plunge in 2008  [1]. By 2014, as the tax went from $10 to $30 per ton of CO2, their economy grew about 12 percent — higher than the national average — while carbon emissions per person went down almost 10 percent, twice as fast as the nation as a whole. [2,3] That policy recycled the revenue in the form of cuts to personal and corporate income taxes, low-income tax credits, and a property tax reduction for northern and rural homeowners.

What about the politics? The carbon tax was proposed and championed by the center-right BC Liberal Party [4] as a more market-friendly route than the cap-and-trade plan supported by their center-left opposition party. [5] Once it was implemented, the program’s popularity grew from 50 to 60 percent, [6] and the rate is currently increasing by an additional $5 per ton of CO2 each year until 2050 emissions targets are met [7]

Encouraged by that success and by strong public support of carbon pricing, [8] the Canadian federal government now requires the remaining provinces to either adopt a strong climate policy of their own or accept a “backstop” federal carbon tax. [9]

As of January 2020, seven of the 13 Canadian provinces and territories are using the federal plan. The price in 2020 is $30 per ton of CO2 and it is increasing by $10 each year until it hits $50 in 2022. Ninety percent of the revenue is returned to consumers in the form of carbon tax rebates, and the Canadian Press reports that most households are getting more in rebates than they are paying in higher energy prices. [10] That’s what we like to hear!

  1. “Carbon Tax Act.” 2008 Legislative Session: 4th Session, 38th Parliament.
  2. “Trends in Greenhouse Gas Emissions in B.C. (1990-2014).” Environmental Reporting BC (updated Aug 2016).
  3. “B.C. to lead Canada in economic growth in 2015: BMO.” Business Vancouver (May 2015).
  4. “British Columbia Liberal Party.” Wikipedia (16 Jan 2018).
  5. “British Columbia New Democratic Party.” Wikipedia (9 Jan 2018).
  6. “Canadian Public Opinion About Climate Change.” Environics Institute, p. 6-7 (2015).
  7. “British Columbia government raises carbon tax, corporate tax rate.” Reuters Market News (Sep 2017).
  8. Chen, R. “Everything You Need To Know About A Carbon Tax—And How It Would Work In Canada.” Chatelaine(Dec 2019).
  9. “Technical paper: federal carbon pricing backstop.” Government of Canada (05 Jan 2018).
  10. “Most Canadian households to get more in rebates than paid in carbon tax: PBO.” The Canadian Press (4 Feb 2020).

This page was last updated on 02/21/20 at 20:31 CST.

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