Fraser Institute
Powerful players count on corruption of ideal carbon tax

From the Fraser Institute
Prime Minister Trudeau recently whipped out the big guns of rhetoric and said the premiers of Alberta, Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, Prince Edward Island and Saskatchewan are “misleading” Canadians and “not telling the truth” about the carbon tax. Also recently, a group of economists circulated a one-sided open letter extolling the virtues of carbon pricing.
Not to be left out, a few of us at the Fraser Institute recently debated whether the carbon tax should or could be reformed. Ross McKitrick and Elmira Aliakbari argued that while the existing carbon tax regime is badly marred by numerous greenhouse gas (GHG) regulations and mandates, is incompletely revenue-neutral, lacks uniformity across the economy and society, is set at an arbitrary price and so on, it remains repairable. “Of all the options,” they write, “it is widely acknowledged that a carbon tax allows the most flexibility and cost-effectiveness in the pursuit of society’s climate goals. The federal government has an opportunity to fix the shortcomings of its carbon tax plan and mitigate some of its associated economic costs.”
I argued, by contrast, that due to various incentives, Canada’s relevant decision-makers (politicians, regulators and big business) would all resist any reforms to the carbon tax that might bring it into the “ideal form” taught in schools of economics. To these groups, corruption of the “ideal carbon tax” is not a bug, it’s a feature.
Thus, governments face the constant allure of diverting tax revenues to favour one constituency over another. In the case of the carbon tax, Quebec is the big winner here. Atlantic Canada was also recently won by having its home heating oil exempted from carbon pricing (while out in the frosty plains, those using natural gas heating will feel the tax’s pinch).
Regulators, well, they live or die by the maintenance and growth of regulation. And when it comes to climate change, as McKitrick recently observed in a separate commentary, we’re not talking about only a few regulations. Canada has “clean fuel regulations, the oil-and-gas-sector emissions cap, the electricity sector coal phase-out, strict energy efficiency rules for new and existing buildings, new performance mandates for natural gas-fired generation plants, the regulatory blockade against liquified natural gas export facilities” and many more. All of these, he noted, are “boulders” blocking the implementation of an ideal carbon tax.
Finally, big business (such as Stellantis-LG, Volkswagen, Ford, Northvolt and others), which have been the recipients of subsidies for GHG-reducing activities, don’t want to see the driver of those subsidies (GHG regulations) repealed. And that’s only in the electric vehicle space. Governments also heavily subsidize wind and solar power businesses who get a 30 per cent investment tax credit though 2034. They also don’t want to see the underlying regulatory structures that justify the tax credit go away.
Clearly, all governments that tax GHG emissions divert some or all of the revenues raised into their general budgets, and none have removed regulations (or even reduced the rate of regulation) after implementing carbon-pricing. Yet many economists cling to the idea that carbon taxes are either fine as they are or can be reformed with modest tweaks. This is the great carbon-pricing will o’ the wisp, leading Canadian climate policy into a perilous swamp.
Author:
Alberta
CPP another example of Albertans’ outsized contribution to Canada

From the Fraser Institute
By Tegan Hill
Amid the economic uncertainty fuelled by Trump’s trade war, its perhaps more important than ever to understand Alberta’s crucial role in the federation and its outsized contribution to programs such as the Canada Pension Plan (CPP).
From 1981 to 2022, Albertan’s net contribution to the CPP—meaning the amount Albertans paid into the program over and above what retirees in Alberta received in CPP payments—was $53.6 billion. In 2022 (the latest year of available data), Albertans’ net contribution to the CPP was $3.0 billion.
During that same period (1981 to 2022), British Columbia was the only other province where residents paid more into the CPP than retirees received in benefits—and Alberta’s contribution was six times greater than B.C.’s contribution. Put differently, residents in seven out of the nine provinces that participate in the CPP (Quebec has its own plan) receive more back in benefits than they contribute to the program.
Albertans pay an outsized contribution to federal and national programs, including the CPP because of the province’s relatively high rates of employment, higher average incomes and younger population (i.e. more workers pay into the CPP and less retirees take from it).
Put simply, Albertan workers have been helping fund the retirement of Canadians from coast to coast for decades, and without Alberta, the CPP would look much different.
How different?
If Alberta withdrew from the CPP and established its own standalone provincial pension plan, Alberta workers would receive the same retirement benefits but at a lower cost (i.e. lower CPP contribution rate deducted from our paycheques) than other Canadians, while the contribution rate—essentially the CPP tax rate—to fund the program would likely need to increase for the rest of the country to maintain the same benefits.
And given current demographic projections, immigration patterns and Alberta’s long history of leading the provinces in economic growth, Albertan workers will likely continue to pay more into the CPP than Albertan retirees get back from it.
Therefore, considering Alberta’s crucial role in national programs, the next federal government—whoever that may be—should undo and prevent policies that negatively impact the province and Albertans ability to contribute to Canada. Think of Bill C-69 (which imposes complex, uncertain and onerous review requirements on major energy projects), Bill C-48 (which bans large oil tankers off B.C.’s northern coast and limits access to Asian markets), an arbitrary cap on oil and gas emissions, numerous other “net-zero” targets, and so on.
Canada faces serious economic challenges, including a trade war with the United States. In times like this, it’s important to remember Alberta’s crucial role in the federation and the outsized contributions of Alberta workers to the wellbeing of Canadians across the country.
2025 Federal Election
Homebuilding in Canada stalls despite population explosion

From the Fraser Institute
By Austin Thompson and Steven Globerman
Between 1972 and 2019, Canada’s population increased by 1.8 residents for every new housing unit started compared to 3.9 new residents in 2024. In other words, Canada must now house more than twice as many new residents per new housing unit as it did during the five decades prior to the pandemic
In many parts of Canada, the housing affordability crisis continues with no end in sight. And many Canadians, priced out of the housing market or struggling to afford rent increases, are left wondering how much longer this will continue.
Simply put, too few housing units are being built for the country’s rapidly growing population, which has exploded due to record-high levels of immigration and the federal government’s residency policies.
As noted in a new study published by the Fraser Institute, the country added an all-time high 1.2 million new residents in 2023—more than double the previous record in 2019—and another 951,000 new residents in 2024. Altogether, Canada’s population has grown by about 3 million people since 2022—roughly matching the total population increase during the 1990s.
Meanwhile, homebuilding isn’t keeping up. In 2024, construction started on roughly 245,000 new housing units nationwide—down from a recent peak of 272,000 in 2021. By contrast, in the 1970s construction started on more than 240,000 housing units (on average) per year—when Canada’s population grew by approximately 280,000 people annually.
In fact, between 1972 and 2019, Canada’s population increased by 1.8 residents for every new housing unit started compared to 3.9 new residents in 2024. In other words, Canada must now house more than twice as many new residents per new housing unit as it did during the five decades prior to the pandemic. And of course, housing follows the laws of supply and demand—when a lot more prospective buyers and renters chase a limited supply of new homes, prices increase.
This key insight should guide the policy responses from all levels of government.
For example, the next federal government—whoever that may be—should avoid policies that merely fuel housing demand such as home savings accounts. And provincial governments (including in Ontario and British Columbia) should scrap any policies that discourage new housing supply such as rent controls, which reduce incentives to build rental housing. At the municipal level, governments across the country should ensure that permit approval timelines and building fees do not discourage builders from breaking ground. Increasing housing supply is, however, only part of the solution. The next federal government should craft immigration and residency policies so population growth doesn’t overwhelm available housing supply, driving up costs for Canadians.
It’s hard to predict how long Canada’s housing affordability crisis will last. But without more homebuilding, slower population growth, or both, there’s little reason to expect affordability woes to subside anytime soon.
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