Carbon levy will spike on New Year's Day, but so will rebates
Some Albertans could actually find themselves making money from the carbon levy
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New Year’s Day marked an increase in the province-wide carbon levy for Albertans, but the government says it will soften the blow with a boost in rebates.
The carbon levy has now increased from $20 per tonne to $30 per tonne of carbon dioxide emissions. According to Deputy Premier Sarah Hoffman, that will translate into an extra two-and-a-half cents per litre at gas pumps.
“We’ve done it in a way that protects ordinary Albertans and gets us that very important environmental leadership profile that we need to ensure we have a strong economy for future generations,” Hoffman said.
According to the Pembina Institute, a think tank that advocates for a transition to clean energy, the levy increase means the average natural gas bill will increase by approximately $5 a month, or 50 cents per gigajoule.
Simon Dyer, Alberta director with the Pembina Institute, is in support of the carbon levy, saying the government’s rebates will make it affordable for the majority of Albertans.
“Most consumers won’t actually notice (the change)… the carbon levy is much smaller than the monthly fluctuations in the price of gas,” he said. “But it is sending a signal that if you’re creating greenhouse gases, there’s an incentive to reduce.”
The government said revenues from the levy will be invested in Alberta through green infrastructure, energy efficiency, renewable energy, bioenergy and innovation.
Trevor Tombe, an associate professor of economics with the University of Alberta, said the carbon levy will also affect the prices of goods and services.
“Businesses need to heat their space, goods still need to be transported from point A to point B, so the carbon tax adds to cost of business, which is passed through in the form of higher prices,” he said.
All together, Tombe estimates the average Alberta household will see an increase of $450 annually. But the government says low and middle-class Albertans will get that money back through a rebate.
“It’s certainly not trivial, but those in the lower and middle-income range, however, do receive a rebate. January is also when the size of the rebate increases. So it’s not just the carbon tax going up, it’s also the cash transfer that’s provided to households,” Tombe said.
According to the Pembina Institute’s estimations, high-income Albertans will be paying about $600 more a year that they won’t get back. Households that earn less than $60,000 may actually make some money from it because their rebate will be higher than the amount they paid in carbon taxes all year.
The government says a couple earning up to $95,000 per year will receive a rebate of $450. A couple with two children earning up to $95,000 per year will receive a rebate of $540.
Albertans do not have to apply to receive the rebate, but must file their 2016 and subsequent income tax returns to be eligible, and it is non-taxable.
On New Year’s Eve, Opposition Leader Jason Kenney of the United Conservative Party took to social media to post a video of him filling up at the pump and criticizing the carbon tax increase. He promised a repeal would be his party’s first bill should they be elected.
How the carbon levy change will affect you
-Albertans can expect to pay about two-and-a-half centres more per litre of gas at the pumps.
-The average Albertan household will see an increase of 50 cents per gigajoule on their natural gas bill, which the Pembina Institute says comes to about $5 extra per month.
-Businesses still need to heat their space and transport goods, and those expenses will be passed on to consumers, who can expect to pay an extra $100 to $150 in 2018 for goods and services.
Many Albertans unsure about how carbon levy changes will play out
Not all middle-class Albertans are convinced the province's rebates will balance the increase they see in gas prices and their heating bills.
Richard Crowe said he and his wife received a $50 rebate in the last year, but he's been paying significantly higher rent since the province instated the carbon levy in January of 2017.
“My rent went up more than $50 … It affects everybody, it trickles down. The people that own the buildings and property are going to pay more to heat them, so they’re going to charge people more to stay in the buildings too,” he said.
“I think it’s just a tax grab,” he added.
Furthermore, he said he doesn't think the carbon tax is going to make people drive less or buy less fuel.
Michael Clarke seems to agree, saying that while he got a $250 rebate last year, it doesn't cover the increase he's paid in his rent or for for goods such as gasoline.
"You’re paying more for everything. $250 just don’t cover it," he said.
But some Albertans, like Cindy Perla, said she supports the carbon levy because the government says it wil invest the funds in items such as LRT infrastructure.
"In the long run hopefully it will be a good thing. It should go back to the environment, towards I guess helping certain things make better use of energy."