On Apr. 1, the federal carbon tax kicked in for Manitoba, New Brunswick, Ontario and Saskatchewan. The tax will add 4.4 cents per litre to the price of gasoline – rising to 11 cents by 2022 – and drive up the cost of everything from home heating to groceries.
The rationale, the federal government says, is to incentivize behavioural changes by making prices higher, since it hopes you won’t be able to buy as much gas and thus you’ll drive less. Besides, with a plan to rebate the money via a tax credit, it insists you won’t actually be out of pocket. In fact, the politicians promise you’ll actually be better off!
Set aside for a minute the magic math of collecting a new tax and redistributing it in such a way that everyone is somehow better off. Ignore that fact that many essential goods – and especially the use of energy sources such as gasoline – are known as inelastic goods because demand remains relatively constant despite price changes. In other words, Canadians still need to drive to work and drop their kids off at school even if Ottawa pushes up the price at the pump. British Columbia has proven this point as its emissions are still rising, despite its carbon tax.
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