Rising prices for housing, groceries, utilities, and other essentials have put a significant strain on families in Canada. As we move into Spring 2024, people might be hoping for a relief but starting April 1, 2024, BC’s carbon tax is set to rise yet again from $65 a tonne to $80 a tonne. According to government figures, the carbon tax on gasoline is set to increase from 14.31 cents per litre to 17.61 cents, meaning Canadians can expect to pay 3.3 cents more at the pump after April 1 than they would have previously. The carbon tax will cost 17 cents a liter of gas, 21 cents a liter of diesel, and 15 cents a cubic meter of natural gas.

British Columbia, Quebec and the Northwest Territories are the only regions that have their own carbon pricing systems in place. The planned April 1 increase will be most noticeable at the gas station and on energy bills.

B.C.’s carbon tax was introduced to put a price on carbon pollution, providing a signal across the economy to reduce emissions while encouraging sustainable economic activity and investment in low-carbon innovation. The BC Liberals’ carbon tax started at $10 a tonne when it was first introduced in 2008 costing people about 2 cents a litre on gasoline. By 2030, it will be 40 cents a liter on gasoline.

How will Carbon Tax Affect Inflation?

According to the Bank of Canada Governor, Tiff Macklem, Canada’s price on carbon only contributes 0.15 percentage points to inflation. Consider that impact this way: with year-over-year inflation lately hovering around three percent, this means the carbon tax causes one-twentieth of price increases. When inflation peaked at just above eight percent last year, the carbon tax would have been responsible for one-54th of it.

For British Columbia, the latest estimates from Statistics Canada suggest carbon taxes increased the average cost of food by about 0.33 percent relative to what they would be in the absence of carbon taxes. That’s the entire effect. Other necessities such as clothing and footwear are approximately 0.2 percent more expensive due to the carbon tax.

Conclusion

If you have any questions regarding BC Carbon Tax or taxes in general, please get in touch with our expert team at Duffin Martin Tax and Accounting in Surrey, BC.