After making an “inadvertent error,” Canada’s independent budget watchdog re-did its analysis of the federal carbon tax and rebates — and came to a similar conclusion.
Thursday’s updated report from the Parliamentary Budget Officer (PBO) found that considering the average household costs of paying the consumer fuel levy, the GST that’s charged and the indirect costs from the carbon tax, on average, households will see a net gain in 2030-31.
The report said “broadly speaking” that its analysis showed larger net gains and lower net household costs than a previous study.
However, on average, households were worse off when the PBO analyzed the economic impact on GDP or investment income.
“Given that the fuel charge lowers employment and investment income, which makes up a larger share of total income for higher-income households, their net cost is higher,” the PBO said on its website.
Canadians, except in Quebec and British Columbia, pay the federal carbon tax on consumer fuels. Most also receive federal rebates. Large emitters in the oil and gas, steel and other industries also pay the carbon price through a separate industrial, or output-based, pricing system.
With Canada’s carbon tax set to increase again on April 1, many Canadians have been asking questions about how it works and what the increase will cost. CBC’s David Thurton breaks down the policy, the price and the rebates.
Earlier this year, the PBO acknowledged that its original economic analysis of the federal carbon tax and rebates inadvertently included the industrial pricing system that applies to heavy emitters.
Consistent with previous reports, the PBO’s updated analysis does not account for the benefits of reducing emissions or the economic costs of climate change. It also does not estimate the impacts of alternative policies.
The Parliamentary Budget Office is a non-partisan government office serving MPs and senators. It produces economic and financial analyses for parliamentarians.