NEW – Federal: Carbon tax "backstop" will increase significantly

New measures announced by the federal government in December that heralded a “healthy environment and healthy economy” included a significant increase in the federal carbon tax or “the backstop”.

This federal fuel charge is presently set at $30 per tonne of CO₂-equivalent under the federal Greenhouse Gas Pollution Pricing Act.

It applies to provinces such as Saskatchewan, Ontario and Alberta as well as territories such as Nunavut and Yukon that do not have a carbon pricing program that meets federal benchmarks.

The current schedule sees the tax rising by $10/tonne per year until 2023, after which the tax will increase by $15/tonne each year. By 2030 the tax will be $170/tonne.

Provinces that do have equivalency agreements with the federal government will also have to adjust their individual plans by varying degrees to ensure that they meet the new targets proposed by the federal government.

As the Federal Fuel Charge Project 2019-2030 Chart shows, at $30 per tonne, this carbon tax on a litre of propane is currently 4.64 cents per litre, compared to 6.63 cents for gasoline and 8.05 cents per litre for diesel.

The tax on propane is lower because it is cleaner than both gas and diesel.

The difference in rate of tax becomes even more apparent in the coming years.

By 2030, the tax will be 26.30 cents per litre for propane, 37.61 cents a litre for gasoline and 45.57 cents a litre for diesel. These are in addition to other federal and provincial taxes that would apply.