Comprehensive Report on the Carbon Tax System in Canada

This report provides a comprehensive analysis of Canada's carbon tax system. It begins with an introduction to climate change and the rationale behind carbon pricing as a tool to reduce greenhouse gas emissions. The report details the federal carbon pricing plan, including the tax rate and its implications for consumers and industries. It examines the responses of different provinces, such as Manitoba's stance, and the impact of the carbon tax on the agricultural sector, including concerns about reduced profit margins and global competitiveness. The report also discusses the advantages and disadvantages of carbon taxes, comparing Canada's approach to those of other countries like France and Sweden. The conclusion summarizes the findings and highlights the long-term goals of the carbon tax system in Canada. The report also mentions the impact on the agricultural sector and the concerns of farmers. The report also includes references to the sources used.

Running head: CARBON TAX SYSTEM IN CANADA
CARBON TAX SYSTEM IN CANADA
Name of the Student
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Table of Contents
Introduction................................................................................................................................2
Manitoba responded to the Federal carbon tax..........................................................................5
Impact of carbon tax on agricultural sector................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................8

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Introduction
Climate Change is disaster in slow motion, the world will not be able to stop the
catastrophic moments for each nation, encompassing Canada. If strong action has not been
taken then by 2040 there will be worldwide disaster which includes food shortages, droughts,
more California type wildfires and flooded coastal cities. CO2 emissions have been identified
as a chief source of global warming, so governments are keen to lessen carbon emission. This
actually means that “greenhouse gas emitters” who are generally engaged in fuel production,
they pay a fixed amount per each tonne of carbon dioxide that are produced from burning
carbon grounded fuel. The purpose of carbon tax is to acquire true cost of scorching carbon.
To reduce emission, the price increases slowly over time so that people get time in adjusting
and adopting a lesser amount of carbon heavy practices. On the other hand, “Cap-and-trade”
is carbon pricing in indirect way. The government limits on carbon emission by companies
who are given release pemits. If a company’s emission drop below their permit, they are
allowed to sell extra permits. According to many scientists and economists, when a
government imposes carbon tax, it raises the enticement for industries to invent and they find
ways to decrease their emission and it can also change the behaviour of each consumer.
According to Sumeet Gulati who is a british economist, suggested that a lower carbon tax that
leads to people implementing everyday measures such as driving less and selecting for more
fuel efficient cars.
According to the Prime Minister of Canada Justin Trudeau, cutting the greenhouse-
gas can reduce the emission. So he introduced national carbon pricing plan in 2019. The plan
is taken mainly to encourage Canadians to use a reduced amount of fossil fuels. Now
Canadians they pay additional amount for the gas they burn and for the products they are
buying. The cost depends on which province they live, whether the states has its own carbon

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tax or Ottawa is implementing its own carbon tax whch is just like as Ontario, New
Brunswick and Manitoba. The provinces divide ideologically over carbon prices. They go
against each other in the courts. It is important for Canadians to know what is being taxed and
what is carbon price. Carbon price is a direct price on emissions, a specific tax on the
consumption of products which create carbon dioxide and methane emissions. It helps in
lowering the excess amount of emissions of “greenhouse-gas”. Natural gas are affected under
the Federal tax. There is a different system for large industrial emittters, they will be taxed on
a portion of their emission. Based on the needs and requirements, provinces of Canada have
the permission to create their own carbon pricing system. A controlling fee is imposed by
“Federal Greenhouse Gas Pollution Pricing Act”, which passed in decemeber 2018, when the
provincial system is absent and for the provinces whose carbon pricing system. 90 percent of
the revenues have been returned to tax payers in the states where fee is imposed(Chatelaine,
2020). Revenue that is generated from federal Greenhouse Gas Pollution Pricing Act, that
came into effect in April,2009, is redistributed to the states(Rivers and Schaufele, 2015).
They did it through tax credits to individual residents. Again then did it through business and
organization that are affected by the tax but who are not able to forward the cost by
increasing prices of the consumer. In 2003, it has been observerd that Alberta becomes first
jurisdiction in North America to implement carbon pricing. In 2007, Alberta passed Specified
Gas Emitters Regulation. In the same year, Quebec implemented the first carbon tax in
Canada and it was anticipated to generate $2 million yearly. There are other provinces like
Prince Edward Island, Nova Scotia, Labrador have proposed Carbon pricing system that
would meet requirements of the federal. In the year 2008, carbon tax which was revenue-
neutral, was proposed during the “Canadian federal election” by the leader of the liberal party
Stephane Dion (Westernfinancialgroup.ca, 2020). In 2008, Conservative party was the winner
of the election and promised to implement a North America –wide cap-and-trade system for

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greenhouse gases. In the time of “Canadian Federal election”, the conservative party made a
promise to implement emission of greenhouse gas trading by 2015 which is also known as
“cap and trade”, it is the system where the government covers the whole amount of carbon
emissions permitted, then generates permits to the companies specify in the amount of carbon
they burn. It has been said that if the enterprise desires to burn greater than its carbon
sharec,then the enterprise must purchase extra permits from other enterprises. Quebec gives
companies permission to purchase credits from the province of California because it is not
cosltlier to decline emissions there, By the estimation of federal, provincial and federal
carbon pricing plans would decline emission of “greenhouse gas” by up to 60 million by
2020 which is in equivalence to 8.3 percent of the nation’s emissions in 2015. The meaning
of Carbon tax is government simply imposing a price on carbon.
Carbon tax is big deal for Canada. Scientists all over the world has come to the point
that the problem of climate change is real and deadly to the world. The scientists of Federal
gave a warning that Canada is warming faster than the rest of the world. Ottawa’s goal is to
decrease emission by 30 per cent which is below 2005 levels by 2030. It has been observed
that the federal carbon pollution price will start low at $20 per ton in 2019, and it will rise at
at $10 per ton per year until reaching $50 per ton in 2022. A $20 per ton carbon tax interprets
into a 16.6 cent per gallon additional charge on gasoline. So by 2022, $50 per ton carbon tax
will raise Canadian gasoline prices by about 42 cents per gallon. It has been noted by the
Preamble that Canada is already receiving the impact of change in climate through the factor
like increases in heat waves,coastal erosion. Canada accepted Paris agreement whose goals
comprise preventing global warming to fewer than 20C above pre-industrial temperature. It
has been observed that the industrial sector is accountable for the largest amount of carbon
pollution(around 40 percent) of Canada. The advantage of carbon tax is it is really easy to
monitor and also easy to comprehend where everyone pays the same price to scorch carbon.

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Another advantage is carbon tax raise the price of gasoline and electricity, then consumer will
become efficient in energy uses which further declines “greenhouse gas emissions”. To
reduce carbon emission, taxes let industries to find the most cost effective ways. The one
disadvantage of carbon tax is that it does not bound an exact cover on emissions. The act of
the government is to only set the prices and they wish that consumer behaviour will do the
rest of the work. Another disadvantage is it makes fossil fuel more costly and it imposes great
burden on the people with low income group. It has been avised that it would be less costly to
reduce those cost by decelerating global warming than paying for gradually risky weather
reimbursements. Canada is counterbalancing the financial on its taxpayers to give back the
revenue to households with a Carbon tax,. Studies have shown that this approach can improve
the nation as disposable income increases due to the discount which exceeds increased cost of
energy for 70% of Canadians(The Globe and Mail, 2020).
Manitoba responded to the Federal carbon tax
Premier Brian Pallister has traded between support and criticism of carbon pricing. In
2018, he executed the states carbon tax and said the government would give attention on
other efforts to control emission, that did lead to the implementation of federal tax in
Manitoba, and during the 2019 federal election, some heated bombast against Mr Trudeau. In
January 2020, Mr Pallister declared that he had been looking for a discussion with Mr
Trudeau and that discussion will encompass a some kind of carbon price. According to
Pallister, Manitoba is always acted as a keystone and this is the province that brings people
together. Mr Pallister had made this clear that he had no plan to back down from his
opposition to federal carbon tax. Pallister is one of five provincial leader who has publicly
complained the federal carbon tax on fossil fuels.

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Impact of carbon tax on agricultural sector
The government of Canada’s carbon tax plan needs states to meet minimum federal
carbon price of $10 per tonne in 2018, rising to $50 dollar per tonne in 2022. The plan of the
government is to tax carbon pollution to endorse cleaner technology and battling change in
climate has been a reason for Canadian’s farmers to worry about. The two main reasons are
that reduces profit margin and the reduction of global competitiveness. Farmers make
progress that the price of inputs that are necessary to operate their business, will upsurge due
to carbon tax. The electricity cost which is vital for irrigation and seed cleaning, is also
projected to rise. In Alberta, both ammonia and urea are formed using natural gas that makes
production focus to the carbon tax. They have a preference to purchase nearby so if farmers
can’t find the money for fertilizers that are produced in Alberta, they have to purchase it from
outside, Fertilizers came from external market requires transportation which does not reduce
the the cost that farmers have to bear. As agriculture is a low margin business, rising cost of
the inputs that requires to run a farm should come out of the low margins. Carbon tax only
puts on to farmers of Canada but does not apply to their worldwide competitors. Some of the
larger global competitor have no plan to impose prices on carbon. Soil protection has been a
worry for Canadian farming industry. That is why environmental practices like zero till
seeding have already been employed by many farms. Technique like“adaptive grazing” has
been looked into by animal producers that attempt to increase the major quantity of animals
on the tiniest number of land for the small amount of time to pull carbon into roots and soils.
In farming operations Carbon levy does not put on to dyed diesel.
Conclusion
When one considers the relative dynamics of CO2 emissions and gross domestic
production growth since 1990, France has experienced a slow economic growth,(1.5 per cent
per year i.e. 51 percent from 1990 to 2017) and enough reduction in energy related

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emissions(-13 per cent), Sweden benefitted from higher economic growth(2.2 per cent per
year) and significant emission reduction(-26 per cent), Canada experience the highest
economic growth rate of the three countries(2.3 percent per year i.e., +86 per cent). The CO2
tax rates have over the years been gradually augmented, the purpose of achieving cost-
effective emission reduction and while still giving households companies time to adapt. It has
been noted that the long term goal of the Swedish government is zero net emissions of
“greenhouse gases” to the air by 2045. France is highly centralized country with presidential
regimes. Transport is the major emission factor in France, with 29 per cent of the energy
related emissions. For industry that represents 11 per cent of the total ,emissions were almost
flat between 1990 to 2008, in spite of economic growth.

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