Members of the federal cabinet applaud as Prime Minister Mark Carney signs a decision note to eliminate the consumer carbon price, on Parliament Hill in Ottawa, on March 14.Justin Tang/The Canadian Press
Eligible Canadians will receive one last federal carbon tax rebate this spring, but Ottawa has yet to explain how it will fund those payments as it stops collecting revenue from the levy.
Setting the consumer carbon price to zero was one of Liberal Leader Mark Carney’s first decisions when he became Prime Minister on March 14, a move that followed his promise during his party’s leadership race to do away with the tax. But, his government said, taxpayers who’ve been receiving the carbon rebate would get one last quarterly payment beginning in April.
The issue is that the carbon rebate payments used to be an advance on the revenue Ottawa would collect from the fuel charge during a three-month period. In other words, a rebate landing in Canadians’ bank accounts in April would reflect proceeds the federal government would collect between April and June.
Now, with the consumer carbon price set to drop to zero at the beginning of April, there will be no fuel charge proceeds to redistribute. But the federal government did not respond to several requests by The Globe and Mail to clarify where the funding for the upcoming rebates would come from.
Caroline Theriault, a spokesperson for the Department of Finance, said via e-mail on Tuesday that “more information on this will be made available in due course.”
The Office of the Prime Minister did not respond to The Globe’s questions, and the Liberal campaign directed a similar query to the Department of Finance.
The Office of the Parliamentary Budget Officer (PBO) said it has incorporated the impact of Ottawa’s decision to set the federal fuel charge to zero while proceeding with the April carbon rebates in its latest fiscal forecast. Those projections show Canada running a federal deficit of $46.8-billion by the end of the 2025-26 fiscal year.
The budget watchdog said it could not provide a breakdown of how exactly changes to the federal fuel charge affected its overall fiscal estimates.
But calculations by The Globe that rely on PBO estimates suggest the April carbon rebate would add nearly $4-billion to the federal budget gap in the next fiscal year in the absence of added revenue to offset that expense.
In a report prepared earlier this month, the PBO had estimated the federal government would distribute a total of $15.2-billion in carbon rebates to households in fiscal 2025-2026. For a single quarterly instalment, the payments would likely add up to around $3.8-billion, or roughly 8 per cent of the PBO’s projected annual deficit.
The Canada Revenue Agency said it will start issuing carbon rebate payments for individuals on April 22 for eligible taxpayers who have filed their 2024 income tax return by April 2.
Canadians who send in their tax paperwork after that date will receive their payments some time later, once their return has been assessed, according to information on the agency’s website.
Residents of all provinces except British Columbia and Quebec, which have implemented their own carbon pricing systems, are set to receive the April payment.
The amount of the payment is not tied to income, but depends on a household’s size and address. For example, a family of four stands to receive an amount between $220 (in Nova Scotia and Prince Edward Island) and $456 (in Alberta).
People in rural areas are eligible to receive an additional 20 per cent, except in PEI, where all residents are considered to be living in small communities and the supplement is incorporated in the base amount.
In Canada’s north, the Northwest Territories also has its own carbon-pricing mechanism, while in Nunavut and Yukon, proceeds from the consumer federal carbon tax go to the territorial governments rather than directly to households.
British Columbia and the Northwest Territories have also recently said they’ll do away with their own carbon pricing.
Mr. Carney used regulation to set the consumer fuel charge to zero and is expected to repeal the section of the law that underpins it if the Liberals win the upcoming election. At the same time, he said he would tighten the carbon pricing system for big industrial emitters.
Conservative Leader Pierre Poilievre, who has made abolishing the carbon levy a cornerstone of his platform, recently said he would eliminate carbon pricing for large emitters as well.
