The hike will be incremental, starting with an increase to $50.00 per tonne in 2022 all the way to $170.00 by 2030, representing a nearly six-fold increase.
The increase in the carbon tax will hike the cost of gasoline, natural gas and other good or services dependant on fossil fuels and transportation.
Canada’s financial situation is not enviable. The country currently has maintained the highest unemployment rate throughout most of the COVID-19 pandemic yet is also generating the largest deficit per capita. Canada’s federal budget deficit is expected to grow to $400bn by the end of the year.
Canada has been monetizing its deficit through open market operations from the Bank of Canada. The country’s central bank assets have also experienced the steepest YoY balance sheet assets to Nominal GDP growth. This will likely lead to years of inflation and low economic growth.
At a time where Canadian industries are facing hardship, the carbon tax hikes come unwelcomed.
Studies have time and time again shown that a carbon tax is not effective at reducing emissions and disproportionately hurts lower-income households.