A tale of 2 taxes: how carbon pricing and revenue rolls out in Alberta versus Sask.
Researchers are comparing the benefits and trade-offs of different carbon pricing plans
While Alberta's NDP government rolled out its carbon pricing plan at the start of 2017 and has collected billions through it, Saskatchewan has ended up with a federally-imposed plan that just came into effect on April 1.
Now, researchers in the two provinces are comparing the benefits and drawbacks of the two plans.
According to economist Brett Dolter, with the University of Regina, carbon pricing generates money and that money can be recycled back to help lower-income households, stimulate the economy, or used to further reduce emissions.
Dolter said he hopes new research will help move the carbon tax discussion from one about whether or not to price it, to one about how the revenue is best spent.
"I think that's an interesting discussion to have and a more productive discussion in my mind than just always talking about should we have [carbon pricing] or not."
Dolter is teamed up with researchers Jennifer Winter and Kent Fellows with the University of Calgary School of Public Policy to compare the two approaches.
Alberta's NDP government estimated carbon pricing would bring in $2.6 billion by the end of March, since it first came into effect. Under that plan, money flows back into a mix of consumer rebates, public transit, coal phaseouts, tax reductions and more.
If elected in next week's provincial election, the United Conservative Party is promising to get rid of Alberta's carbon tax. That would mean the federal backstop would eventually kick in, at $20 per tonne until 2020 — $10 less than Alberta's current rate.
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Alberta's approach is different from Saskatchewan's since not everyone gets the rebate.
Single people earning less than $47,500 a year, or families earning less than $95,000 a year, receive a full rebate to help offset costs of the carbon levy. Households earning more than $100,000 do not receive rebates.
The provincial carbon tax website contains a prediction that about 60 per cent of Alberta households would get full or partial rebates.
How it works in Saskatchewan
The federal government's plan, which applies in Saskatchewan, prices carbon at $20 per tonne. This price will rise to $50 by 2022. In this plan, nearly 90 per cent of money collected from rebates goes back to households.
The rebate is not tied to household income, meaning nearly everyone in Saskatchewan will qualify for a rebate this year, unless they were not a resident of Canada in 2018 or if they spent any time in prison.
The average individual in Saskatchewan would be eligible to receive roughly $300, with an average household of two adults and two children receiving a return of roughly $600.
Dolter said the research will compare people's carbon costs across income categories. It also will compare a few factors, including how progressive the policy is in terms of helping out lower-income households and how it impacts economic growth. It will also look at a third factor, on how some provinces might use the revenue generated from carbon taxes to try and reduce emissions further.
"We'll try to highlight those tradeoffs and I hope that then politicians and policymakers pick up on that and have a discussion about what is the best way to recycle the revenue," he said.
Dolter said the researchers will have results for Saskatchewan by the end of May, followed by a deeper dive into what carbon pricing means to provinces like Alberta, Ontario, New Brunswick and Manitoba to really take "a broader look across the country."