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Federal carbon tax a hot issue today

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6 minute read

From Resource Works

When it comes to Canada and carbon taxes, times have certainly changed in very little time.

We had wondered how long Ottawa’s national carbon-tax system would last when, after implementing it as a mandatory national scheme, the feds suddenly announced an exemption for home heating oil in Newfoundland and Labrador.

Pressed by NL Premier Andrew Furey, a Liberal, and Liberal MP Ken McDonald, Prime Minister Justin Trudeau announced the exemption last October, saying it would help Atlantic Canadians with the cost of living.

The exemption would last until March 31, 2027. And for NL households that burn oil, the feds said it would mean an average $250 annual savings.

Alberta and Saskatchewan saw the exemption as unmitigated vote-buying politics, and they weren’t alone.

On Jan. 1, 2024, Saskatchewan stopped collecting the federal carbon tax on natural gas used for home heating in that province. Premier Scott Moe declared that this was in response to Ottawa’s “unfair” exemption for Newfoundland and Labrador.

“Trudeau has provided a carbon tax exemption on home heating for families in one part of the country, but not here. It’s unfair, it’s unacceptable.”

Saskatchewan went on to challenge the exemption, in federal court, on constitutional grounds, and won a temporary injunction. Later, pending a final court decision, Saskatchewan and Ottawa agreed that the province would be responsible for “50 percent of the outstanding tax amounts.”

But Ottawa’s carbon tax (oops, sorry, Ottawa likes to call it “carbon pricing” and “carbon pollution pricing”) has now run into new political trouble.

First, national NDP leader Jagmeet Singh, who had voted for the carbon tax, pulled out of a deal supporting Trudeau’s Liberal Party in government.

Singh then went on to slam Trudeau’s approach of exempting fuels in favored geography. And he said the NDP would come up with a system that doesn’t “put the burden on the backs of working people.”

Then, British Columbia Premier David Eby, long a strong supporter of the carbon tax — but facing an election on Oct. 19 — suddenly declared: “I think it’s critical to also recognize that the context and the challenge for British Columbians have changed. A lot of British Columbians are struggling with affordability.

“If the federal government decides to remove the legal backstop requiring us to have a consumer carbon tax in British Columbia, we will end the consumer carbon tax in British Columbia.”

Would Prime Minister Trudeau remove the backstop requirement?

Apparently not. Instead, Environment and Climate Change Canada is looking to run a $7-million “climate literacy and action” advertising campaign to promote the carbon tax and the quarterly rebates that many Canadians receive under it.

And the prime minister, earlier this year, declined to meet the premiers of Alberta, Ontario, Saskatchewan, New Brunswick, and Newfoundland and Labrador on the issue.

“The carbon tax has contributed to increasing stress and financial pain for millions of Canadians,” Alberta Premier Danielle Smith wrote to the prime minister.

Ontario Premier Doug Ford wrote: “While we all have a role in protecting the environment, it cannot be done on the backs of hardworking people.”

But Trudeau turned down the call for a meeting: “We had a meeting on carbon pricing and every single premier came together to work on establishing a pan-Canadian framework on climate change years ago.

“And part of it was that there would be a federal backstop to make sure that pollution wasn’t free anywhere across the country.”

Whether the carbon tax has “worked” or not to reduce pollution is an open question. Supporters say yes. Opponents say no.

poll late last year found that Canadians were feeling slightly more confident in the carbon tax’s effectiveness at combating climate change — but uncertainty was still high.

But the Liberal government is already getting a message from voters — having lost in two recent by-elections in Manitoba and Quebec, and in an earlier one in a “safe seat” in Ontario (Toronto-St. Paul’s).

In the Quebec one on Monday, the Liberals lost their longtime safe seat of LaSalle—Émard—Verdun to the NDP, by just over 200 votes. It had been a Liberal stronghold for years, won by more than 20 percent of the vote in previous campaigns.

The next federal election will take place on or before October 2025, and Trudeau’s opponents have already been loudly cranking up “Axe the Tax” campaigns.

And that means the carbon tax.

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Business

It Took Trump To Get Canada Serious About Free Trade With Itself

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From the  Frontier Centre for Public Policy

By Lee Harding

Trump’s protectionism has jolted Canada into finally beginning to tear down interprovincial trade barriers

The threat of Donald Trump’s tariffs and the potential collapse of North American free trade have prompted Canada to look inward. With international trade under pressure, the country is—at last—taking meaningful steps to improve trade within its borders.

Canada’s Constitution gives provinces control over many key economic levers. While Ottawa manages international trade, the provinces regulate licensing, certification and procurement rules. These fragmented regulations have long acted as internal trade barriers, forcing companies and professionals to navigate duplicate approval processes when operating across provincial lines.

These restrictions increase costs, delay projects and limit job opportunities for businesses and workers. For consumers, they mean higher prices and fewer choices. Economists estimate that these barriers hold back up to $200 billion of Canada’s economy annually, roughly eight per cent of the country’s GDP.

Ironically, it wasn’t until after Canada signed the North American Free Trade Agreement that it began to address domestic trade restrictions. In 1994, the first ministers signed the Agreement on Internal Trade (AIT), committing to equal treatment of bidders on provincial and municipal contracts. Subsequent regional agreements, such as Alberta and British Columbia’s Trade, Investment and Labour Mobility Agreement in 2007, and the New West Partnership that followed, expanded cooperation to include broader credential recognition and enforceable dispute resolution.

In 2017, the Canadian Free Trade Agreement (CFTA) replaced the AIT to streamline trade among provinces and territories. While more ambitious in scope, the CFTA’s effectiveness has been limited by a patchwork of exemptions and slow implementation.

Now, however, Trump’s protectionism has reignited momentum to fix the problem. In recent months, provincial and territorial labour market ministers met with their federal counterpart to strengthen the CFTA. Their goal: to remove longstanding barriers and unlock the full potential of Canada’s internal market.

According to a March 5 CFTA press release, five governments have agreed to eliminate 40 exemptions they previously claimed for themselves. A June 1 deadline has been set to produce an action plan for nationwide mutual recognition of professional credentials. Ministers are also working on the mutual recognition of consumer goods, excluding food, so that if a product is approved for sale in one province, it can be sold anywhere in Canada without added red tape.

Ontario Premier Doug Ford has signalled that his province won’t wait for consensus. Ontario is dropping all its CFTA exemptions, allowing medical professionals to begin practising while awaiting registration with provincial regulators.

Ontario has partnered with Nova Scotia and New Brunswick to implement mutual recognition of goods, services and registered workers. These provinces have also enabled direct-to-consumer alcohol sales, letting individuals purchase alcohol directly from producers for personal consumption.

A joint CFTA statement says other provinces intend to follow suit, except Prince Edward Island and Newfoundland and Labrador.

These developments are long overdue. Confederation happened more than 150 years ago, and prohibition ended more than a century ago, yet Canadians still face barriers when trying to buy a bottle of wine from another province or find work across a provincial line.

Perhaps now, Canada will finally become the economic union it was always meant to be. Few would thank Donald Trump, but without his tariffs, this renewed urgency to break down internal trade barriers might never have emerged.

Lee Harding is a research fellow with the Frontier Centre for Public Policy.

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2025 Federal Election

Carney’s budget is worse than Trudeau’s

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By Gage Haubrich

Liberal Leader Mark Carney is planning to borrow more money than former prime minister Justin Trudeau.

That’s an odd plan for a former banker because the federal government is already spending more on debt interest payments than it spends on health-care transfers to the provinces.

Let’s take a deeper look at Carney’s plan.

Carney says that his government would “spend less, invest more.”

At first glance, that might sound better than the previous decade of massive deficits and increasing debt, but does that sound like a real change?

Because if you open a thesaurus, you’ll find that “spend” and “invest” are synonyms, they mean the same thing.

And Carney’s platform shows it. Carney plans to increase government spending by $130 billion. He plans to increase the federal debt by $225 billion over the next four years. That’s about $100 billion more than Trudeau was planning borrow over the same period, according to the most recent Fall Economic Statement.

Carney is planning to waste $5.6 billion more on debt interest charges than Trudeau. Interest charges already cost taxpayers more than $1 billion per week.

The platform claims that Carney will run a budget surplus in 2028, but that’s nonsense. Because once you include the $48 billion of spending in Carney’s “capital” budget, the tiny surplus disappears, and taxpayers are stuck with more debt.

And that’s despite planning to take even more money from Canadians in years ahead. Carney’s platform shows that his carbon tariff, another carbon tax on Canadians, will cost taxpayers $500 million.

The bottom line is that government spending, no matter what pile it is put into, is just government spending. And when the government spends too much, that means it must borrow more money, and taxpayers have to pay the interest payments on that irresponsible borrowing.

Canadians don’t even believe that Carney can follow through on his watered-down plan. A majority of Canadians are skeptical that Carney will balance the operational budget in three years, according to Leger polling.

All Carney’s plan means for Canadians is more borrowing and higher debt. And taxpayers can’t afford anymore debt.

When the Liberals were first elected the debt was $616 billion. It’s projected to reach almost $1.3 trillion by the end of the year, that means the debt has more than doubled in the last decade.

Every single Canadian’s individual share of the federal debt averages about $30,000.

Interest charges on the debt are costing taxpayers $53.7 billion this year. That’s more than the government takes in GST from Canadians. That means every time you go to the grocery store, fill up your car with gas, or buy almost anything else, all that federal sales tax you pay isn’t being used for anything but paying for the government’s poor financial decisions.

Creative accounting is not the solution to get the government’s fiscal house in order. It’s spending cuts. And Carney even says this.

“The federal government has been spending too much,” said Carney. He then went on to acknowledge the huge spending growth of the government over the last decade and the ballooning of the federal bureaucracy. A serious plan to balance the budget and pay down debt includes cutting spending and slashing bureaucracy.

But the Conservatives aren’t off the hook here either. Conservative Leader Pierre Poilievre has said that he will balance the budget “as soon as possible,” but hasn’t told taxpayers when that is.

More debt today means higher taxes tomorrow. That’s because every dollar borrowed by the federal government must be paid back plus interest. Any party that says it wants to make life more affordable also needs a plan to start paying back the debt.

Taxpayers need a government that will commit to balancing the budget for real and start paying back debt, not one that is continuing to pile on debt and waste billions on interest charges.

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