Analysis: If Liberals have any hope of winning carbon tax battle, they have to help Canadians understand what it actually costs

By Dave Korzinski, Research Director

Nov. 28, 2023 – One thing is certain about the carbon tax discourse in this country, the “pro” side is losing the battle. Recent data from the Angus Reid Institute finds overall support for the carbon tax down 11 points since 2021. This, as CPC leader Pierre Poilievre gains momentum with an “axe the tax” slogan and focus on cost-of-living concerns.

It’s clear now that household financial concerns are paramount in the minds (and voting preferences) of Canadians, and while they would like to continue to fight climate change, most see the carbon tax as an inefficient and unfairly expensive mechanism to do so. But do Canadians actually know what they’re paying?

Well, the answer is some do. This is an important aspect of the communications battle that the Trudeau government is currently losing. Our latest release on this topic found many Canadians convinced that they’re either not receiving their Canada Climate Action Incentive rebate at all, or that when they do, the benefit gained back is not worth the cost they’ve paid in the preceding quarter toward carbon-taxed activities.

Based on responses to our survey ARI created an Index to better understand these perceptions in the regions that operate under the federal carbon pricing mandate: Alberta, Saskatchewan, Manitoba, Ontario, and beginning this year, Atlantic Canada. What we found is that broadly, one-quarter of residents say they do not receive a rebate, and one-quarter are unsure either whether they received one, or what it amounted to. The largest group say they received a rebate but feel they paid more in extra costs than they received back. The federal government claims that nearly all households in these jurisdictions will receive a rebate, as long as they filed taxes, and that 80 per cent of households will earn back more than they pay.

The most troubling perceptions here from the perspective of the federal government, in its ongoing public-opinion freefall, are those among lower income earners. Analysis from the non-partisan Parliamentary Budget Office suggests these groups are nearly guaranteed to receive back more than they pay. But as we can see in the subsequent graph, they’re little more likely to be certain that they’re benefiting from the program than those with much higher incomes:

*Smaller sample size

Why does this matter? Well, if you’re attempting to sell a tax by stating that low-income earners won’t ultimately pay anything, it’s important to ensure people feel like this is their reality.

Those who feel they’re breaking even or benefiting from the tax are vastly more likely to say that they support the carbon tax – four-in-five do. Even those who are unsure about it, but simply don’t feel they’re losing out, are 50/50. Those who say they pay more than they get or don’t receive a rebate at all are overwhelmingly opposed to the program.

Now more broadly, this isn’t an advocation for the carbon tax, this is an exercise to understand whether or not people know what it’s costing them and what they receive back. Let’s take a deeper dive on how the perceived costs of two items taxed – home heating and vehicle fuel – affect views to see how some misperceptions may be exacerbating a losing issue for the government.

Gasoline costs and support for the carbon tax

The estimated cost added to fuel by the carbon tax in the aforementioned jurisdictions is easy to find. The tax adds between 14 and 17 cents per litre, depending on whether a person is using gasoline (lower) or diesel (higher).

When asked, just three-in-10 Canadians accurately identify this number. One-in-seven (15) underestimate it, while more than one-in-three (35%) overestimate the cost. Those in B.C., where the tax is matched to the federal rate at 14.3 cents per litre, are most likely to vastly overestimate. Note that Quebec is excluded because its carbon tax is currently lower than the federal rate:

The partisan aspect of this is important as well. Those who supported the Liberal Party or NDP in the 2021 federal election are four-times as likely to underestimate the cost added to fuel, while fully half of past CPC voters overestimate it (50%). Nearly identical numbers among each party accurately estimate the additional tax:

The correlation here is that nationally, those who overestimate the cost of the carbon tax on a litre of fuel are vastly more likely to oppose it overall. This right here is a communications failure.

Going back to our Rebate Perspective Index, which applies only in those provinces with a federal carbon tax mandate, we can see that the more a person believes the price of gas is impacted, the less likely they are to feel that they’re getting their money back in rebates:

Home heating costs and support for the carbon tax

The cost of home heating varies widely based on the form energy used and the region of the country a person resides. The most recognizable example of this is Atlantic Canada – the subject of considerable contention in recent weeks, after the federal government offered a three-year exemption from the carbon tax for home heating oil. Importantly, home heating oil is used across the country, but in its highest proportions in Atlantic Canada, leading many – in fact a strong majority – to say the move was politically motivated by the Trudeau government to improve its standing in that region.

The increased cost of the carbon tax on home heating oil varies but one estimate by a Dalhousie University professor provides some context. His estimate placed the carbon tax portion of an energy bill in Halifax at about nine per cent.

What about other types of heating? In Manitoba, energy operators have estimated that the carbon tax on natural gas will cost about $58 per year or an eight per cent annual increase for larger users. Meantime, SaskEnergy estimates an additional $67 per year or about seven per cent annual increase for natural gas customers.

These numbers are difficult to ultimately pin down, but here’s how Canadians feel the carbon tax affects their heating bill, based on what type of home heating they utilize. Disregarding for a moment whether they’re correct or not about the cost impact, a huge number of Canadians have no idea how the carbon tax affects their heating, or assume it is an amount that exceeds 15 per cent. Those whose homes are heated using electricity are most likely to assume the cost is minimal:

Clearly there is a variance here. Consider Saskatchewan. Here, 90 per cent of residents reportedly use natural gas for home heating, and as noted SaskEnergy has estimated the carbon tax to account for approximately seven per cent increase on their customers’ heating bills under the current carbon tax. In Saskatchewan, 44 per cent of residents assume the tax accounts for at least double that, or more, while another 14 per cent aren’t sure.

Confusions over pricing appear to be on all portions of the partisan spectrum. For some, any extra cost is too much, while for others, a certain benchmark may be acceptable. What this uncertainty leads to, however, is a situation where those who feel they’re breaking even or benefiting from the carbon tax are much more likely to assume that heating costs are lower than those who feel they’re being shortchanged:

Ultimately, one has to ask what the end game is here. Canadians feel that climate change is an immediate priority, but they’re worried about the cost of living. Within these environmental and financial circumstances, the carbon tax, which received majority support in both 2018 and 2021 is now facing majority opposition.

That said, if the government is correct, the carbon tax should be benefiting those who are worst off, and putting more money in their pockets – particularly in a place such as Saskatchewan. Those who are worse off are evidently not satisfied with what they’re receiving in rebates. It’s up to the federal government to get around this roadblock and more clearly communicate the costs and benefits of carbon pricing. Seven-in-10 (69%) Canadians operating under the same fuel tax don’t know what it costs them when they fill up. If those types of numbers persist, it could represent the beginning of the end of a signature Liberal policy: one that has gone from a winning platform item to a political liability.


Feature Image Credit – Justin Trudeau Facebook

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