Thoughts on Canada's Carbon Tax Increase

During my brief Canadian visit, the news headlines were dominated by the Trudeau government's increase in the carbon tax which took effect today. 

The carbon tax was implemented federally by the Trudeau government in 2019. There are several provincial and territorial jurisdictions which have their own carbon tax - British Columbia, Quebec and the Northwest Territories. The federal carbon tax has separate schemes for both industry and consumers. The latter group receives rebates on a quarterly basis.

However, what is complicating the rollout of this tax increase is that Canada is in the midst of what is being termed an affordability crisis especially in the area of housing at both the rental and ownership level as well as soaring food prices. Whereas the U.S. unemployment rate has been below 4% for just about two years, Canada's unemployment rate is nearing 6% (5.8%). 

With an election no later than 18 months away, the Trudeau Liberals (who are in minority government alliance with the NDP led by Jagmeet Singh) have consistently been trailing the Tories led by Trump styled populist Pierre Poilievre by double digits. In polls taken in March 2024, the Tories led the Liberals between 14 and 21 points. If you think President Biden has re-election problems, his problems pale in comparison to those of Trudeau. 

Some Liberals such as Newfoundland and Labrador Premier Andrew Furey asked Trudeau to delay implementing the carbon tax but Trudeau dismissed Furey's concerns claiming that he is bowing to "political pressure". Furey pleaded with Trudeau for an 11th hour meeting, but to no avail. Trudeau allies are not exactly in ample supply. Furey is only the Liberal Premier in all of Canada. 

By the time the election rolls around Trudeau will have been in power for a decade and people have grown tired of Trudeau and are tuning him out. Of course, this isn't limited to one person, one ideology or one country. U.K. voters cannot wait to toss out the Tories after nearly 15 years in office as the party is projected to win fewer than 100 seats with Labour expected to win more than 450 seats in an election which could be called later this year.

At least where the Tories are concerned in Canada, they have the wind at their back. Poilievre has been holding "Axe the Tax" rallies all over the country drawing thousands of people. But should the Tories be elected; I don't believe Poilievre will axe the tax. He might reduce it or say he will gradually phase it out. If his government does eliminate the carbon tax, he'll probably replace it with an even more regressive tax. But right now, Poilievre can say anything because he is not in any position to implement anything. The next Canadian federal election is his to lose - even if he does knowingly march with white supremacists. In which case, Canada will get their own Trump.