The Rise of the Carbon Tax
How It Was Imposed
The Trudeau government enacted the Greenhouse Gas Pollution Pricing Act in December 2018. The federal carbon pricing backstop applied in provinces without equivalent provincial systems โ initially Ontario, Manitoba, Saskatchewan, and New Brunswick, later expanded to Atlantic Canada.
The tax began at $20/tonne in 2019, rising $10/year until 2022, then rising $15/year โ reaching $80/tonne by April 2024 โ on a planned trajectory to reach $170/tonne by 2030.
| Year | Carbon Price (per tonne) | Impact on Gasoline (approx.) |
|---|---|---|
| 2019 | $20/tonne | ~4.4ยข/litre |
| 2020 | $30/tonne | ~6.6ยข/litre |
| 2021 | $40/tonne | ~8.8ยข/litre |
| 2022 | $50/tonne | ~11ยข/litre |
| 2023 | $65/tonne | ~14ยข/litre |
| Apr 2024 | $80/tonne | ~17ยข/litre |
| 2025 (target) | $95/tonne | ~21ยข/litre (eliminated Apr 1) |
| 2030 (target) | $170/tonne | ~37ยข/litre (never reached) |
What Canadians Actually Paid
The Rebate Claim vs. Reality
The Trudeau government claimed that 80% of households received more in carbon rebates than they paid in the carbon tax. However, the Parliamentary Budget Officer (PBO) โ an independent Parliamentary watchdog โ found that when considering the full economic impact (including higher prices for goods, transportation, and heating), the majority of middle-class families actually ended up worse off overall.
The PBO's 2022 report specifically found that in most provinces, when economic costs are factored in, households in all income quintiles except the lowest received less benefit than they paid in carbon costs. The government consistently used the narrower, more favorable calculation in its public messaging.
While the government committed to returning all fuel charge revenues to Canadians through rebates, critics noted: the government collected the money first, administered it through a bureaucracy, and then returned portions โ with real friction and administrative costs along the way. Rural Canadians who depended on vehicles for work and had no alternative to gasoline or heating oil bore a disproportionate burden.
Provincial Revolts
Alberta โ Danielle Smith
Alberta Premier Danielle Smith was among the most vocal opponents, consistently describing the carbon tax as "punishing Albertans for the economic success of their province." Alberta repeatedly challenged the tax's fairness to oil-producing regions and threatened various forms of non-compliance.
Ontario โ Doug Ford
Ontario Premier Doug Ford fought the carbon tax in courts and required gas stations to display "carbon tax cost" stickers on pumps โ a move later found unconstitutional by courts. Ford called the tax a "job killer" and successfully built a multi-provincial coalition against it.
Legal Challenges
Saskatchewan, Manitoba, Ontario, and New Brunswick refused to implement provincial systems, triggering the federal backstop. Saskatchewan and Ontario challenged the constitutionality of the federal carbon tax in court. The Supreme Court of Canada upheld the Greenhouse Gas Pollution Pricing Act as constitutional on March 25, 2021 โ in a 6-3 decision. But public and political opposition continued to grow despite the court victory.
Trudeau's Reversal โ And Then Carney's Day 1 Kill
The Political Calculation
By late 2024, the Liberals were polling 20 points behind the Conservatives, with "Axe the Tax" as Pierre Poilievre's central campaign slogan resonating powerfully with Canadians struggling with cost-of-living pressures. Every Liberal leadership candidate except one pledged to eliminate the consumer carbon tax.
Carney Eliminates It โ Day 1
On March 14, 2025 โ his first day as Prime Minister โ Mark Carney eliminated the consumer carbon tax, setting the rate to 0% effective April 1, 2025. It was the most dramatic policy reversal in recent Canadian political history.
"[This] will make a difference to hard-pressed Canadians, but it is part of a much bigger set of measures that this government is taking to ensure that we fight against climate change."
โ Mark Carney, March 14, 2025, announcing elimination of the consumer carbon tax
If the carbon tax was wrong enough to eliminate on Day 1 in 2025, why was it right to impose it in 2019? Why was it right to raise it to $80/tonne while Canadians were struggling with inflation, housing costs, and cost of living? Why did it take Liberal political survival โ not principle โ to finally remove it?
The Industrial Carbon Tax Remains
What Carney Kept
Carney eliminated the consumer carbon tax (the fuel charge paid directly by Canadians at the pump). However, the industrial carbon tax โ the Output-Based Pricing System (OBPS) applied to large industrial emitters โ remains in place. Critics argue this still raises costs for Canadian industry, making domestic manufacturers less competitive against American and foreign competitors who face no comparable carbon pricing.
The Carbon Credit Connection
Carney's Financial Interest in Carbon Markets
While Carney eliminated the consumer carbon tax, he simultaneously championed the expansion of voluntary carbon markets โ the mechanism through which his former employer Brookfield Asset Management could profit significantly. Carney founded the Taskforce on Scaling Voluntary Carbon Markets and co-chaired GFANZ. The 30x30 land plan (see Land Grab page) involves Indigenous Protected Areas generating carbon credits as a revenue stream โ a financial mechanism aligned with Carney's former private sector career. Critics ask: did Carney kill the unpopular consumer carbon tax while preserving the profitable architecture of carbon markets that benefit his financial network?