Please read this post and get to know in detail about Canada Carbon Tax: Who Wins and Who Loses? Effect on Upper, Lower and Middle Class Income.

Canada Carbon Tax : Who Wins and Who Loses?

If you reside in Canada and have checked your bank account, you will have received your quarterly carbon tax rebate as a relief for the tax paid on Carbon consumption. This payment was made on January 15th to the low and middle class families.

Are the rebates going to be sufficient to offset the annual carbon price that the majority of Canadian households must pay? We’ll be looking at this question in this article because it comes up for a lot of economists. In this article you will better understand Canada Carbon Tax: Who Wins and Who Loses? with the help of our example.

Upper-Middle Class Families

A family of four who drive a 2020 Ford F-150 PL, a 4×4 pickup truck, and a 2024 Cadillac CTS are at the high end of our upper-class salary range. Toyota minivan, Sienna. We have an image of a family residing in a house that is around 2300 square feet. They probably have a gas water heater and a gas stove, and they use natural gas to heat that house.

Canada Carbon Tax Who Wins and Who Loses

The 2020 Ford F-150 PL 4×4 uses 11.8 liters of petrol every 100 kilometers. For the purpose of comparison, we will assume that this family drives each car 20,000 km annually, which is the typical annual mileage allowed by most new car warranties. Both of these vehicles will travel 200 intervals of 100 kilometers. 200 sets multiplied by 100 kilometers is 20,000 km.

Since that is how fuel efficiency is measured in Canada, I will base my research on these sets of 100 km. We discuss gasoline burnt in liters per 100 kilometers. It is important to note that the carbon tax is not yet at 17.6 cents per liter as of the time of recording, but it will be on April 1st, 2024.

Using our Ford F-150 as an example, we can compute the gas burnt for those 200 sets of 100 km. This gives us 200 * 11.8 l, or 2360 L of gas. At 17.6 per liter of petrol, the carbon tax comes out to be $45.39. Let’s look at automobile number two for the year. automobile number two is a brand-new 2024 Toyota Sienna minivan. This van burns 6.6 liters of fuel per 100 kilometers, assuming that the automobile travels 20,000 kilometers annually. As a result, it will also travel 200 sets of 100 kilometers.

For example, if we were to drive two large but potentially non-gas-guzzling vehicles 20,000 km each and 40,000 km total over the course of a year, we would pay out $45.39 in carbon tax for the Ford F-150 4×4 and $232.32 in carbon tax for the Toyota Sienna minivan. That works out to be 200 * 6.6 L, or 1,320 L of gas at 17.6 cents per liter of gas. The carbon tax would equal $23.32 to run that van properly.

The carbon price that our fictitious household would pay on its natural gas usage is what we are calculating right now. The average monthly usage of natural gas in a Canadian home is 7.4 gigles. We then double that monthly sum of 7.4 gigles by 12 to obtain the yearly total, which comes out to be 88.8 G. $355.120 is the result of multiplying it by the gig rate of $4. $1,242.62, or 1.2 gigabytes, is the average consumption. Thus, the net carbon tax that we obtain is $1,738; this is 97.82 more than the $976 that this household would receive as a carbon tax refund in the

Middle Class Families

For our Ford F-150, the calculation is 200 * 11.8 l, or 2360 L of gas. At 17.6 per liter of petrol, the carbon tax comes out to be $45.39. Now let’s see how much gas was consumed for those 200 sets of 100 km. Let’s examine vehicle number two for the current year. Vehicle number two is a brand-new 2024 Toyota Sienna crossover. Given that this van burns 6.6 liters of fuel per 100 kilometers, and assuming that it is driven 20,000 kilometers annually, it will also be driven 200 times for 100 kilometers.

Based on the fuel consumption rating Search tool provided by Natural Resources Canada, the 2021 Hyundai Santa Fe hybrid uses 7.4 liters of gas per 100 kilometers. Assuming that the vehicle is driven 20,000 kilometers annually, this translates to 200 * 7.4 L, or 1,480 liters of gas at a cost of 17.6 cents per liter. The carbon price will come to 260.48.

Let us now assume that the other vehicle owned by this family is a 2016 Toyota Corolla with a 1.8 L 4-cylinder automatic gearbox that travels 14,000 km annually. Consequently, it will travel 140 sets of 100 kilometers.

According to Natural Resources Canada, this automobile uses 7.3 L of gas every 100 km, or 140 times 7.3 L, which comes out to 1,22 L of gas at a temperature of 17.6 C per liter of gas. This works out to a carbon tax of $17987 for the operation of the vehicle. In order to drive these two cars a total of 34,000 km over the year, this family would have to spend $44.31 in total.

We end up with a total of $795 55, which is $1 less than the $976 carbon tax rebate this family would receive in Ontario since this is our middle-class typical family, and they consume natural gas at an exactly average rate.

Lower-Middle Class Families

Sometimes a household with a really low income doesn’t even own a car. The amount of kilometers driven is what truly matters in this case, not the quantity of automobiles.

Let’s compute the tax on 28,000 kilometers of driving annually using a 2018 Honda Civic with a 2 L, 4-cylinder automatic gearbox as an example. Now, for 280 sets of 100 km, this family will drive a 2018 Honda Civic or Honda Civics.

With this specific automobile, the fuel consumption is 6 liters every 100 kilometers, or 280 times 6 liters, or 1,680 L of petrol at a cost of 17.6 per liter, which translates to a $295.68 carbon tax expenditure. In order to determine how much natural gas this family will consume, we will multiply the typical Canadian household’s income of $355.120 by eight, which will give us $284.

This results in a total carbon tax expenditure of $579.84 for this family for 2024, which is $396 less than the $976 that this specific family would get from the Ontario automobile carbon tax refund for the year.

Effect on Upper, Lower and Middle Class Income

Just one of our three hypothetical middle-class families—the upper middle-class family—saw a net loss from the carbon price, and that loss was only slightly less than $100. In terms of the carbon tax rebate, a family in the lower middle class would have an advantage since they will receive a larger refund than they will need. Middle range middle class families will also get benefit from rebate, but not much high.

With this analysis, I am going to end our analysis on Canada Carbon Tax: Who Wins and Who Loses? Please, let us know your views on this article, in the comment section of the page.


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