CHARBONNEAU – ‘Axe the tax’ slogan should read ‘shaft the poor’

CONSERVATIVE LEADER Pierre Poilievre’s plan to “Axe the Tax” will hurt most Canadian households. Cutting taxes always seems like a good tactic until you realize the consequences.

That’s especially true of the federal carbon tax. According to data from Statistics Canada, 94 per cent of households with incomes below $50,000 receive rebates greater than the carbon tax they pay.

If Poilievre were honest, he would promise to “axe the rebate” and “shaft the poor.”

Economics professor Trevor Tombe at the University of Calgary has calculated the cost of paying the carbon tax compared to rebates received.

While there are minor variations in the calculation from province to province, the trend is the same: “A clear majority of households do receive rebates that are larger than the carbon taxes they pay for,” says Professor Tombe.

Not just lower income households benefit from the program.

“If we got rid of the carbon tax and the rebate,” says Tombe, “then this would harm a much larger fraction of lower-and middle-income households than it would higher-income households.”

The number of households that receive rebates is based on income. About one-half of households in the lower and middle income categories see a net gain of between $20 and $40 per month. And about four per cent see a net gain of $70 per month or more.

Even some high-income households receive more in rebates than they pay in carbon taxes. Of course, high-income households spend more on everything including fossil fuels so the rebate isn’t relatively as great.

The carbon tax is the easiest way to reduce emissions. The more fossil fuels you consume, the more carbon tax you pay. And there are indirect ways in which we pay for carbon in the form of increased prices on the goods and services we buy as companies pass along the costs of their own carbon taxes to consumers.

Some high-income household get more in rebates than they spend on the carbon tax. About 55 per cent of households with incomes above $250,000 receive more in rebates than they pay in costs, a net gain of $30 per month,

About 45 per cent of households with incomes above $250,000 have a net loss of $20 per month and five per cent see a net loss of $100 per month or more.

If Poilievre were honest, he would make it clear who would lose and who would gain from his “axe the tax” gambit. But he pretends to appeal to average-income Canadians. High-income households stand to gain the most if the tax were axed tomorrow.

Then there is the problem of the climate emergency which Poilievre conveniently ignores.

In a market economy, the carbon tax is the best way to lower carbon emissions. If something costs more, the less likely you are to buy it.

And if the carbon tax is revenue-neutral, or as close as neutral as possible given the income disparity in Canada, then it’s not really a tax at all. It should properly be called a “carbon rebate” since that’s the effect it has on most Canadian households.

Mel Rothenburger is a regular contributor to CFJC Today, publishes the ArmchairMayor.ca opinion website, and is a recipient of the Jack Webster Foundation Lifetime Achievement Award. He has served as mayor of Kamloops, school board chair and TNRD director, and is a retired daily newspaper editor.  He can be reached at mrothenburger@armchairmayor.ca.