In case you missed it, the B.C. government is tabling legislation today to eliminate the consumer carbon tax tomorrow after the federal requirement was dropped.
But what does that mean for your bottom line?
The consumer carbon tax being scrapped will impact you in many ways, including how much you pay at the pump for gasoline or diesel and how much you’ll pay at home for utilities like heating and natural gas.
We also spoke to Kathryn Harrison from the Department of Political Science at UBC about a province without the carbon tax.
Gas prices
Koshiro K/Shutterstock
For liquid fuels, the carbon tax rate varies. For gasoline, it’s 17.61 cents per litre; for diesel, locomotive fuel, heating oil and industrial oil, it’s 20.74 cents per litre.
Some Metro Vancouver residents have reported seeing a spike in gas prices since the news about the consumer carbon tax being dropped was revealed. However, gas experts suggest this is more of a refinery issue rather than an issue with gas retailers raising prices to offset the carbon tax being removed.
While you should technically save 17.61 cents per litre plus the associated decrease in GST when April 1 hits, we won’t know how prices will fall until then since various factors affect the price at the pump.
Individuals and families should see cost savings in reduced gas taxes, but it will also benefit businesses, specifically the movement of freight — such as the trucks that move goods from warehouses to shops and restaurants. This could help reduce retail price inflationary pressures.
Impact on home utility bills
FortisBC
According to a statement to Daily Hive from FortisBC, for the average customer using around 7.5 gigajoules of gas per month, the carbon tax accounts for around $29.89 of the bill.
“Currently, the B.C. Carbon Tax Act requires FortisBC to collect the carbon tax on behalf of the provincial government. We are working closely with the province to see if we can implement this change within the existing law,” a FortisBC spokesperson said.
The Canadian Taxpayer Federation says if the tax is not scrapped, it would increase to 21 cents for a litre of natural gas, 25 cents per litre of diesel, and 18 cents per cubic metre of natural gas on April 1.
Additionally, the federation said that if the tax is hiked instead of scrapped, it would cost a family that filled up a minivan once a week a total of $728 for the year. The federation said it would’ve added $435 to the average family’s home heating bills in the 12 months after the hike.
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Impact on inflation
Ashley Grise/Shutterstock
According to an analysis from Desjardins Economics released earlier this month, while the price at the pump should be impacted immediately, things like grocery bills will take a while longer to go down.
Desjardins predicts that inflation will be about 0.7 per cent lower in April 2025 than it would have been if the carbon tax stayed.
More specifically, the report suggests that removing the price of pollution will drop gas prices by about $0.18 per litre on April 1 in provinces where the fuel charge is applied.
In comparison, the carbon tax in Canada was previously supposed to increase to $0.21 per litre and continue to increase in the following years.
Carbon tax credits
Another thing being scrapped is the carbon tax credit.
“As the B.C. climate action tax credit helps offset the impact of the carbon taxes paid by individuals and families, the B.C. climate action tax credit program will also end, subject to approval of the legislature,” the B.C. government states.
However, one more credit is expected to go out this April based on your 2023 income tax return. Eligibility for the credit is determined automatically by the CRA.
“The maximum rebate is $500 per year for a single person earning under $41,000 per year. For a family of four, it would be $1,000 if they earned less than $57,000 per year. At the lowest income levels, most households are probably getting more back in rebates than they’re paying in carbon taxes. The repeal of both will hurt them,” said Harrison.
However, she adds that unlike in other provinces subject to the federal carbon tax, most households, especially those with higher incomes, were making net payments, meaning they were getting less back in rebates than they were paying in taxes.
“So with the repeal of both, they will come out ahead. And, of course, that’s also why repealing the provincial consumer carbon tax will leave a hole in the budget.”
Industrial carbon tax and the revenue gap
The industrial carbon tax is not changing, and B.C. Premier David Eby has stated that the province will “continue to make sure that big polluters pay… And for the people who are filling up their cars, who are heating their homes, for the residents of British Columbia, we’re going to make sure that the carbon tax is not there for them.”
One reality that stems from the scrapping of the carbon tax is a significant revenue gap.
The provincial government’s recently released 2025 budget estimated that provincial carbon tax revenue would reach $2.56 billion in the 2024/2025 fiscal year, $4.03 billion in 2025/2026, $4.27 billion in 2026/2027, and $4.51 billion in 2027/2028.
Harrison offered some insights into what the government could do to fill the revenue gap.
“One option is to cut spending or services, another is to raise other taxes, and the final one is to run a deeper deficit than already anticipated.”
We also asked her if she thought the tax did anything to help the climate as intended.
“People do respond to price incentives, so the consumer carbon tax across Canada would have resulted in emissions lower than they would have been. Folks buying a new car in anticipation of a steadily increasing carbon tax were probably more inclined to consider fuel-efficient or electric vehicles,” she said.
“It may have tipped the balance to purchasing a heat pump rather than replacing a gas furnace with another one in some cases,” adding that the incentive is no longer there.
“I expect there’s a political lesson here – which is to hide the costs of reducing consumer emissions. That could be through subsidies for EVs and heat pumps, which shift the costs to other taxpayers, who are less likely to notice.”
Harrison also commented on the pushback to net-zero mandates for both new and existing buildings.
“The same actors who rallied opposition to the consumer carbon tax can rally opposition to those proposals, including by labelling them carbon taxes in disguise.”
Are you happy that the carbon tax is being scrapped? Let us know in the comments.
With files from Isabelle Docto and Kenneth Chan