‘It’s just like a free handout’: Canada’s final carbon price rebates spark concerns

A person pumps gas at a gas station in Mississauga, Ont., on Feb. 13, 2024. (Christopher Katsarov / The Canadian Press)

Some Canadians will soon receive final carbon rebate payments just before the April 28 federal election, but one economics professor has concerns.

Robin Boadway, emeritus professor in economics at Queen’s University in Kingston, Ont., says rebates would not actually come from carbon tax revenues since the government already ended consumer carbon pricing on April 1 and had been supplying the rebates ahead of collecting those revenues.

“It’s based on estimated carbon tax revenues that are going to be collected after the rebate is paid,” Boadway said in a video interview with CTVNews.ca on Monday. “It’s not that there’s a lot of money involved, it’s just the principle of the thing of continuing to send this money out, even though no carbon taxes were being collected to pay for it.”

The Liberal government’s tax-free rebate was paid four times a year “in advance” before households had to pay for higher costs from carbon pricing, according to the federal government’s website.

Boadway said he thinks the government should’ve been consistent by cancelling the rebate at the same time as they got rid of the consumer carbon pricing.

“The thing that is a little bit irritating about it is that there was no … transparency associated with it,” he said. “Most people don’t realize that when they get this rebate cheque, it’s not actually a rebate cheque in the meaningful sense of the word because it’s not being covered by carbon tax revenues anymore. It’s just like a free handout that people are getting.”

Boadway says the government may have kept the rebate to make the transition to a no-carbon tax regime as painless as possible for consumers. However, he says that was also unnecessary, since Canadians would be paying less for gasoline and heating oil now that the consumer carbon price was eliminated.

When CTVNews.ca asked the Department of Finance Canada if it had a response to Boadway’s concerns, it provided a link to its website detailing information on the recent changes to the Canada Carbon Rebate.

“During the election period – the Caretaker period – we cannot comment on policy positions, including matters relating to tax policy,” a spokesperson wrote in an email to CTVNews.ca on Tuesday. “The Government of Canada’s orientation with respect to policy matters will be determined after a new Cabinet is sworn in.”

Who is eligible for carbon price rebates?

Those who qualify for the rebates and filed their 2024 income tax and benefit return electronically by April 2 will receive the payment starting April 22, according to the Canada Revenue Agency (CRA) on its website.

Eligible Canadians who filed after that date will get the rebates after their 2024 returns are assessed.

Your family situation and province will affect the amount you may receive, but not your family income, according to the CRA.

Liberal Leader Mark Carney announced on March 14 that he would remove the highly divisive carbon price, or federal fuel charge for consumer purchases, his first move as prime minister after he won the Liberal leadership race.

The consumer carbon price was former prime minister Justin Trudeau’s signature climate policy. The Carney government also cancelled requirements for provinces and territories to have a consumer carbon price. Both moves took effect April 1.

However, the federal carbon price for industry remains, which the government has called a “fair and effective” system targeting large emitters of greenhouse gas emissions.

The Canada Carbon Rebate aimed to return “direct proceeds” from the federal fuel charge to residents where it applied in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, Nunavut and Yukon. The fuel charge generally applied to 21 fossil fuels and combustible waste.

With files from The Canadian Press