Carbon tax has very little effect on Quebecers’ everyday expenses: IDQ

The cost of Quebec’s carbon pricing system would represent only a small portion of the price at the pump, according to a report by the Institut du Québec (IDQ) released on Thursday.

The IDQ’s exercise provides an estimate of the cost of this environmental policy as it resurfaces in public debate, explains its executive director, Emna Braham, in an interview.

Car owners would pay an average of $197 more per year due to Quebec’s participation in the carbon exchange, according to the think tank’s estimate. On average, a household with one car spends $3,077 per year on fuel.

“Our carbon pricing system applies to businesses,” she points out. “It’s a measure that is a little less visible than the usual carbon tax that we had elsewhere in Canada (before the Carney government abolished it) and is therefore less understood and less visible to Quebec citizens.

“We wanted to take stock to see what the real impact on Quebecers’ wallets was,” she continued.

Quebec’s participation in the carbon market resurfaced in public debate after Ottawa abolished the Canadian carbon tax. Quebec was not subject to the Canadian tax, as the province had its own system.

Excluding fuel, the bill for an average family would be $62 per year, based on annual spending of $78,982.

The price of products increases when the company has inputs subject to Quebec’s carbon pricing system, which generally represents a small portion of total household expenses.

“Think of the gasoline that will be used to transport products from the factory to stores, for example,” illustrates Braham.

Carbon pricing has very little effect on the price of everyday consumer products, according to the IDQ.

Households with natural gas heating systems are those that incur the highest surcharge, at $315 per year.

These figures take into account the statistical profile of the average household and will vary from one family to another, depending on their travel and consumption habits.

Maintaining public support

Braham believes that carbon pricing is effective in reducing greenhouse gas emissions when it is part of a broader toolkit. “Carbon pricing is very useful, but it is even more effective when combined with subsidies and regulations.”

Although relatively minimal compared to the expenses of an average household, the cost of carbon pricing can be more burdensome for low-income households.

The IDQ therefore suggests redirecting some of the government’s environmental measures toward less affluent households.

“We could talk about additional assistance to make the transition to less carbon-intensive heating or transportation,” says its executive director.

The mistake to avoid would be to use carbon pricing revenues to make up for the shortfall in the Land Transportation Network Fund (FORT), which is used to finance public transportation, but also the road network.

“That would be problematic, because we would be taking money collected for the purpose of fighting climate change to finance new roads, which is contrary to the fight against climate change,” says Braham.

Bill 7, aimed at reducing bureaucracy, would allow Quebec to redirect the $1.8 billion surplus from the Electrification and Climate Change Fund (FECC), formerly known as the Green Fund, to the Generations Fund or FORT.

In its economic update presented earlier this week, the government confirmed that the $1.8 billion surplus from the Green Fund would be redistributed to the Generations Fund.

“If we use the surplus from the (Green) Fund, we will increase government spending, and when we are in deficit, the last thing we want to do is increase spending,” explained Finance Minister Eric Girard.

Braham believes that choosing to pay down the debt rather than fund the road network was the better of the two options.

While she “understands” the goal of reducing government debt, she notes that taking revenue earmarked for environmental objectives and using it for other purposes could undermine public confidence.

“Could changing the use of the revenue generated further erode public support? That’s the risk we see,” she warns.

– With information from Caroline Plante, The Canadian Press

–This report by La Presse Canadienne was translated by CityNews