Federal Carbon Tax Plan

Oct 26 2018

The federal government has released its official plan for the carbon tax that is to be implemented beginning January 2019. This tax plan will be released to provinces that opt to use it over a provincial carbon tax, as well as those provinces that don’t have a carbon pricing plan.


As supporters and critics emerge to discuss the changes and implications of this national carbon tax, many businesses are wondering how to forecast how this pricing scheme will affect their 2019 budget. This article will help to clear the haze surrounding the costs that Canadian businesses should be expecting to pay.


Individuals will be taxed in this new plan primarily through an increase at the pump and rising natural gas prices: fuel in Ontario is forecasted to increase by 4.4 cents per litre in 2019, with natural gas rising 3.9 centres per cubic meter. The federal government, however, has indicated that individuals will actually gain more money than they spend in the form of an annual rebate. In Ontario, the average household (at 2.6 people) will pay $244, but be compensated $300 in 2019. Where is this extra money magically coming from? The excess will be paid by Canadian businesses.


The calculation for figuring out how much a business will be required to pay to this carbon tax is split in two. If your business creates over 50,000 tonnes of CO2 equivalent per year in emissions, then you will be billed on the Output-Based Pricing System (OBPS). This system also offers an optional opt-in for companies creating over 10,000 tonnes of CO2 eq per year, beginning in 2020. If your business is under this threshold, as all but 174 businesses in the 4 provinces that will have the federal plan imposed on them, you will be charged on a per-use basis of electricity, natural gas, and fuel CO2 equivalent emission amounts. Unlike individuals, however, businesses will not be receiving rebates to cover the increased costs.


Want to figure out what this carbon tax will cost your business, and how to budget accordingly? Canadian Energy Strategies has in-house energy experts, ready to assist you and your company with forecasting carbon tax related price increases, as well as strategies that you can implement in order to reduce your related costs. Email me today at lclimenhage@ces-energy.com.  



Articles and Websites Referenced:

Government of Canada 1  2

National Post

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