Canada's new 'tax and dividend' policy aims to change consumer behavior and lower emissions without breaking family budgets.
NEW YORK – Canada completed its roll-out of a nationwide carbon tax this week, part of a broader push by Prime Minister Justin Trudeau to clash emissions 30 percent by 2030.
Nicholas Rivers is a professor of climate and energy policy at the University of Ottawa.
“So anytime now that a Canadian buys natural gas or gasoline or diesel or coal, there’s a levy put on those fuels that reflects the amount of carbon emissions that will be released when those fuels are burned.”
Those taxes will increase the price of filling up the tank of a small car by around $1.50, and that will more than double by 2022.
In some provinces that designed their carbon taxes, revenue will be put toward environmental projects, but in four provinces that resisted the carbon tax until Monday, money will be returned to taxpayers in their annual refunds – a tax-and-dividend model designed to change consumer behavior without harming family budgets.
Gilbert Metcalf is a professor of economics at Tufts University and a carbon tax advocate.
“The idea of a revenue-neutral reform I think is really, really important to disentangle debates about climate policy from debates about the right size of government.”
Kathryn Harrison, a professor of political science at the University of British Columbia, says the Canadian policy could serve as a model.
“Even when a significant majority of people believe we should act on climate change, they are still very reluctant to have costs imposed on them, and they will embrace counterarguments that let them off the hook.”
Conservative opposition leader Andrew Scheer warned Monday that tax rebates wouldn’t cover the rising cost of food and other products requiring transport, but economists disagree, saying 70 percent of Canadians will get more back in rebates than they pay in taxes.
The issue is likely to play a prominent role during nationwide elections this fall.