Canadian Taxpayers Demand End to Hidden Carbon Tax

By Steven Sukkau, Local Journalism Initiative Reporter, Winnipeg Sun

A national taxpayers’ advocacy group is urging Prime Minister Mark Carney to eliminate what it calls a “hidden carbon tax” embedded in federal fuel regulations. The Canadian Taxpayers Federation (CTF) warns the policy could significantly increase gasoline and diesel costs for rural Canadians, including farmers and residents of small Manitoba communities.

The CTF says federal clean fuel regulations that came into effect July 1, 2023, are already pushing up fuel prices and could add as much as seven cents per litre to gasoline by 2026, with costs rising further in the years ahead.

“Carbon taxes make life more expensive, hurt Canada’s economy and don’t work,” said Franco Terrazzano, the federation’s federal director. “Ottawa’s hidden carbon tax will cost families hundreds of dollars and blow a multi-billion-dollar hole in Canada’s economy.”

The regulations require fuel producers to gradually reduce the carbon intensity of gasoline and diesel. If companies are unable to meet those targets, they must purchase compliance credits. The federation says these costs are passed directly on to consumers at the pump. Unlike the federal carbon levy on home heating or fuel, the federation notes there are no rebates tied to these regulations.

For rural Manitobans, who often travel long distances for work, health care and basic services, fuel price increases can hit harder than in urban centres. Farmers, in particular, rely heavily on diesel to plant, harvest and haul grain, with limited alternatives available for large-scale equipment.

According to analysis from the Parliamentary Budget Officer, the regulations could increase gasoline prices by as much as 17 cents per litre when fully implemented in 2030. The PBO estimates the average Canadian household could pay between $384 and $1,157 more per year by that time, depending on the province.

The PBO has also described the policy as “regressive,” noting that lower-income households tend to spend a larger share of their income on transportation and other energy-intensive goods. This effect can be magnified in rural and remote regions.

Government documents cited by the federation suggest the regulations could reduce Canada’s overall economic output by up to $9 billion by 2030. The PBO has further stated that Canada’s total emissions are not large enough on their own to materially affect global climate change.

Terrazzano said the federation is calling on Ottawa to remove all forms of carbon pricing embedded in fuel costs.

“Carney should make life more affordable and get our economy firing on all cylinders by ending all carbon taxes,” he said.

Federal officials have previously argued the clean fuel regulations are necessary to reduce emissions over time and encourage investment in lower-carbon fuels. The government has not indicated whether it plans to amend or repeal the regulations.

For rural Manitobans already grappling with rising input costs, interest rates and tight margins, the debate highlights growing concerns about how national climate policies play out far from city centres where fuel is not a convenience, but a necessity.