The report titled Carbon Pricing For The Paris Target: Closing The Gap Within Output-Based Pricing was first flagged by Blacklock’s Reporter.
“We assume that additional carbon pricing needed to achieve the Paris target will begin in 2023 and rise through 2030”, the report reads.
“The Budget Office estimates the additional carbon pricing necessary to achieve the Paris target ranges from $67 per tonne in 2030 under the broad-based carbon levy, to between $81 under the dynamic output-based pricing system and $239 per tonne under the static output-based pricing system in 2030”.
A tax of $289 per tonne would spell massive increases in the price of gasoline ($0.69 tax per litre), natural gas ($0.57 tax per cubic meter), aviation fuel and diesel (respectively $0.75 and $0.80 taxes per litre).
These steep hikes would reflect on the cost of transportation for everyday workers, disproportionately affecting middle-class and lower-income households. It would affect grocery prices, travel, and heating costs.
Studies have time and time again shown that a carbon tax is not effective at reducing emissions and disproportionately hurts lower income households.
“For decades, economists have known that a revenue-neutral carbon tax imposes a hidden cost by exacerbating pre-existing distortions of the tax system, adding a drag onto the economy that would exceed the benefits from recycling the revenue”, wrote Kenneth P. Green and Ross McKitrick from the Fraser Institute.
In a post-COVID era, efforts will be needed to rebuild a strong economy devastated by lockdowns and waves of business closures. Levying new taxes during such an effort could seriously hinder the Canadian recovery.