Canada's Carbon Tax to Have 350% Price Increase On Gas Prices By 2030.
Canada's carbon tax is about to make fuel very expensive over the next nine years. This is a part of the government's plan to reduce CO2.
Just as many Canadians assumed the acute energy crisis in North America is enough to the already high petroleum prices, recent data shows an upwards of a 350% price increase on the cost of petrol per litre over the next nine years.
We all knew that gas prices were going to get expensive as Prime Minister Justin Trudeau announced a new tax on pollution. Carbon pricing is not new to Canada, with the first carbon tax being implemented in 2007 in the province of Quebec. However, the federal government decided to take part in the role of carbon pricing in 2019 by implementing a $15/per tonne carbon tax.
However, even with so many consumers still operating conventional vehicles, when will the amount of tax be capped? And, how much tax is too much for the consumer to bear?
The impact of the carbon tax on fill-up costs.
Fuel prices were already expensive before the carbon tax, but in future years consumers can expect a rise between 8.8 cents and 39.6 cents per litre over the next nine years according to the Canadian Energy Centre. These figures are based on current data projections by the federal government.
Source: Authors’ calculations from Canada Revenue Agency, 2021.
Source: CBC News.
Even as consumers begin to switch to alternative-fuel-powered vehicles. Many are still left dealing with the high price of petroleum. Canada's top five best-selling vehicles are expected to face an annual petrol price increase of nearly $1,000. That is an astonishing amount considering how much of the world's oil is produced in Canada.
Source: Canadian Energy Centre
Vehicles with high MPG ratings will face the burden of large annual petrol price increases. The Toyota RAV4 for instance will experience a $609 fuel price increase by 2030. However, the V8-powered vehicles will face the largest portion of the burden as a result of the carbon tax.
What is the point of a carbon tax and is it effective in reducing CO2?
A carbon tax is a tax levied on the CO2 emission output of goods and services produced in a particular country. In other words, a carbon tax serves as an excise tax. An excise tax is a mere way of the government sociably and monetarily punishing your consumption of a particular good or service. Similar to what the governments have been doing with cigarettes for decades.
However, a carbon tax as a policy is a rather inexpensive and low-action decision to address climate change. Some consumers may switch to battery-electric vehicles or hybrids because of high petrol prices, but generally, the demand for petrol is inelastic. If Canada is to properly lower CO2 emissions on a national scale, more significant policies will be required than just taxing the general public consumption of the final product.
It is cheaper to purchase fuel in the United States than it is in Canada.
You might be surprised to hear this but if you are fortunate enough to live near the Canada-US border, you likely should consider buying your petrol in the United States than in Canada. Fuel prices in New York state for instance average at $3.557 per gallon. That being 0.93 cents USD a litre. Even with the currency conversion, you are still only paying $1.15 per litre. That is roughly anywhere between 0.35 cents to 0.57 cents cheaper depending on the time of day.
The future of Canada's fuel prices is only going to get higher.
As a result of targets to reduce CO2 emissions by 80% by 2050, it goes without saying that Canada can expect the cost per tonne on carbon output to continue to rise. Unless future governments plan to reform the carbon tax, consumers can expect to continue paying high prices for decades to come. Possibly the best solution in any of this is to consider buying a more fuel-efficient vehicle or possibly even buy an electric one.