Economy
Federal carbon tax hike will hurt future generations
From the Fraser Institute
” since 2005, emissions from China increased by a staggering 71.7 per cent. It’s absurd to think that, even if Canada could drive it’s GHG emissions to zero, there would be any measurable impact on the global climate. “
Despite calls from seven of Canada’s premiers (including one premier from his own party) to scrap the upcoming carbon tax hike, and the threat of a non-confidence vote by the Opposition in Parliament, Prime Minister Trudeau has doubled down as he tries to convince Canadians that somehow this tax, which is set to rise from $65 per tonne of greenhouse gas emissions (GHG) to $80/tonne on April 1, will really be good for them.
Speaking with reporters in Calgary (not coincidentally Premier Danielle Smith’s backyard), the prime minister said, “My job is not to be popular,” adding “My job is to do the right things for Canada now and do the right things for Canadians a generation from now” to “deliver that better future one generation from now, two generations from now.”
But Trudeau’s argument that somehow GHG reductions, which might stem from Canada’s carbon tax, will yield appreciable benefits of any kind—economic or environmental—now or in future is nonsense.
Why?
Because Canada’s share of global GHG emissions is slowly declining and small relative to the world’s larger emitters particularly China. Indeed, in 2021 Canada’s emissions comprised 1.5 per cent of global GHG emissions compared to 26 per cent for China (in 2018). And since 2005, emissions from China increased by a staggering 71.7 per cent. It’s absurd to think that, even if Canada could drive it’s GHG emissions to zero, there would be any measurable impact on the global climate. And no impact on climate means no improved environmental benefits for future generations.
Economically, the prime minister’s argument is even less compelling than the proclaimed environmental benefit. According to a study published by the Fraser Institute, implementing a $170 carbon tax would shrink Canada’s economy by 1.8 per cent and produce significant job losses and reduced real income in every province.
The cadre of Trudeau government policies, including the carbon tax and imposition of federal bills C-48 (which bans large oil tankers carrying crude oil off British Columbia’s north coast, limiting access to Asian markets) and C-69 (which introduces subjective criteria including the “social impact” of energy investment into the evaluation process of major energy projects), combined with impending regulations such as GHG emission caps, are contributing to a collapse in business investment and ultimately economic stagnation in Canada. Per-person gross domestic product (GDP)—a broad measure of living standards—has barely budged in the last nine years and in fact stood in 2014 at $58,162, which is $51 higher than at the end of 2023 (inflation-adjusted). In other words, living standards for Canadians have declined.
Capital investment, which contributes to economic growth and higher living standards, is also declining. A 2021 Fraser Institute study showed that the growth rate of overall capital expenditures in Canada slowed substantially from 2005 to 2019, and the growth rate from 2015 to 2019 was lower than in virtually any other period since 1970. Moreover, as recently as 2000 to 2010, overall capital investment in Canada enjoyed a substantially higher growth rate than in other developed countries, but from 2010 to 2019, Canada’s investment growth rate dropped substantially below that of the United States and many other developed countries. Corporate investment in Canada as a share of total investment was also the lowest among a set of developed countries from 2005 to 2019.
Far from delivering environmental or economic benefits for Canadians “one generation from now” or “two generations from now,” Prime Minister Trudeau’s policies have thrown serious shadows over the future economic prospects of Canadians who will find themselves less well-off and less economically capable of adapting to predicted climate risks whether manmade or natural.
Author:
The Canadian Taxpayers Federation welcomes the Conservative Party’s promise to boost the basic personal amount for working seniors and calls on all parties to commit to further tax relief.
“Many seniors are working because they’re struggling to pay the bills and this tax relief will help them,” said Franco Terrazzano, CTF Federal Director. “Letting working seniors earn an extra $10,000 tax-free is a good thing and it will make their golden years more affordable.”
Today, Conservative Party Leader Pierre Poilievre announced he would expand the tax-free portion of seniors’ incomes.
Poilievre said he would “increase the basic personal amount for working seniors to $25,000, meaning seniors will be able earn an additional $10,000 of employment income tax free.”
Poilievre estimates this would “save a working senior making $35,000 a year an extra $1,300.”
The Conservative Party also promises income tax relief that would save a two-income family up to $1,800. The Liberal Party promises income tax relief that would save a two-income family up to $825.
“The best way the government can make life more affordable is to let people keep more of their own money,” Terrazzano said. “All parties should commit to further tax relief, especially for Canadian businesses which need to be competitive in the wake of American tariffs.”
From the Fraser Institute
By Jake Fuss and Grady Munro
Canadians will head to the polls on April 28 after Prime Minister Mark Carney called a snap federal election on Sunday. As the candidates make their pitch to try and convince Canadians why they’re best-suited to lead the country, Trump’s tariffs will take centre stage. But while the tariff issue is important, let’s not forget the other important issues Canadians face.
High Taxes: As many Canadians struggle to make ends meet, taxes remain the largest single expense. In 2023, the latest year of available data, the average Canadian family spent 43.0 per cent of its income on taxes compared to 35.6 per cent on food, shelter and clothing combined. High personal income tax rates also make it harder to attract and retain doctors, engineers and other high-skilled workers that contribute to the economy. Tax relief, which delivers savings for families across the income spectrum while also improving Canada’s competitiveness on the world stage, is long overdue.
Government Debt: At the end of March, Canada’s total federal debt will reach a projected $2.2 trillion or $52,094 for every man, woman and child in Canada. The federal government expects to pay $53.7 billion in debt interest costs in fiscal year 2024/25, diverting taxpayer dollars away from programs including health care and social services. The next federal government should rein in spending and stop racking up debt.
Red Tape: Smart regulation is necessary, but the Canadian economy is plagued by a costly and excessive regulatory burden imposed by governments. Regulatory compliance costs the economy approximately $12.2 billion each year, and the average business dedicates an estimated 85 days towards compliance. The next federal government should cut undue red tape and make Canada an easier place to do business.
Housing Affordability: Canadians across the country are struggling with the cost of housing. Indeed, Canada has the largest gap between home prices and incomes among G7 countries, and rents have spiked in recent years in many cities. In short, there’s not enough housing to meet demand. The next federal government should avoid policies that stoke further demand while working with the provinces and municipalities to remove impediments to homebuilding across Canada.
Collapsing Business Investment: Business investment is necessary to equip workers with the tools, technology and training they need to be more productive, yet business investment has collapsed. Specifically, from 2014 to 2021, inflation-adjusted business investment per worker fell from $18,363 to $14,687. Declining investment has helped create Canada’s productivity crisis, which has led to a decline in Canadian living standards. Clearly, Ottawa needs a new policy approach to address this crisis.
Declining Living Standards: According to Statistics Canada, inflation-adjusted per-person GDP—a broad measure of living standards—dropped from the post-pandemic peak of $60,718 in mid-2022 to $58,951 by the end of 2024. The next government should swiftly reverse this trend by enacting meaningful policy reforms that will help promote prosperity. The status quo simply will not suffice.
Tariffs are a clear threat to the Canadian economy and should be discussed at length during this election. But we shouldn’t forget other important issues that arose long before President Trump began this trade war and will continue to hurt Canadians if not addressed.
Jake Fuss
Director, Fiscal Studies, Fraser Institute
Grady Munro
Policy Analyst, Fraser Institute
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