Canada to collect C$2.81 billion in direct revenue from federal carbon price in 2019-20

OTTAWA (Reuters) – The Canadian government will collect billions of dollars in direct revenue from its federal carbon pricing system over the next four years, but most of the country’s households will still receive more in rebates than they initially pay, Canada’s budgetary watchdog said on Tuesday.

Canadian Prime Minister Justin Trudeau and his then-majority Liberal government introduced a revenue neutral carbon pricing system in October 2018 as part of its pledge to combat climate change.

The policy includes a “backstop” that applies to five Canadian provinces whose own provincial climate plans the Trudeau government said did not meet federal standards, including Ontario – Canada’s most populous province – and energy-rich Alberta.

Under the program, the majority of the proceeds from the fuel charge are returned directly to individuals and families through rebates.

On Tuesday, the Parliamentary Budget Officer said the Canadian government could expect to collect C$2.81 billion ($2.12 billion) in direct revenues in 2019-20 from its current C$20 per tonne price on carbon.

Direct revenues, it noted, would rise to C$8.27 billion in 2022-23, with the carbon price increasing to C$50 per tonne.

An additional C$99 million will be collected this fiscal year through Canada’s federal sales tax, the PBO said, adding that figure is expected to triple by 2022-23.

Households, the PBO said, can still expect to receive 90% of the revenues raised from the fuel charge proceeds and about 80% of total revenue collected via direct federal rebates.

“Under the federal government’s current rebate structure, most households will still receive more than what they pay in fuel charges,” said Parliamentary Budget Officer Yves Giroux.

Canada’s main opposition Conservatives vehemently oppose the Trudeau government’s carbon tax, insisting the policy hurts Canadian families and businesses and should be repealed.