Budget watchdog carbon tax analysis re-do shows similar finding
Parliamentary Budget Officer re-did its analysis after it made an 'inadvertent error'
After identifying an "inadvertent error," Canada's independent budget watchdog revised its analysis of the federal carbon tax and rebates, arriving at a similar conclusion.
In Thursday's updated report, the Parliamentary Budget Officer (PBO) found that, on average, households will experience a net gain in 2030-31 when factoring in the costs of the consumer fuel levy, GST, and the indirect costs of the carbon tax. The PBO noted that its latest analysis showed "broadly speaking" larger net gains and lower household costs compared to a previous study.
However, the report also indicated that when considering the carbon tax's economic impact on GDP and investment income, households were, on average, worse off. The PBO explained, "The fuel charge lowers employment and investment income, which makes up a larger share of total income for higher-income households, so their net cost is higher."
Canadians, with the exception of those in Quebec and British Columbia, pay the federal carbon tax on consumer fuels and receive federal rebates. Large industrial emitters in sectors such as oil, gas, and steel also pay a carbon price through a separate industrial pricing system.
Earlier this year, the PBO admitted that its original economic analysis mistakenly included the industrial pricing system for heavy emitters. The revised analysis, consistent with previous reports, does not factor in the benefits of emission reductions or the economic costs of climate change, nor does it estimate the impacts of alternative policies.
The Parliamentary Budget Office is a non-partisan body that provides economic and financial analysis to MPs and senators.
