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Ottawa to hike federal carbon tax to $170 a tonne by 2030 

Prime Minister Justin Trudeau today released the government’s strategy to dramatically reduce greenhouse gas emissions by 2030 — and its centrepiece is a gradual hike in the federal carbon tax on fuels to $170 a tonne by that year.

The tax will increase significantly from its current level — the tax is just $30 a tonne this year — as part of a push to meet and surpass Canada’s ambitious goal of reducing greenhouse gas emissions by 30 per cent below 2005 levels by 2030.

“Simply put, it would be much harder to cut pollution if it was free to pollute. The principle is straightforward: a carbon price establishes how much businesses and households need to pay for their pollution. The higher the price, the greater the incentive to pollute less, conserve energy and invest in low-carbon solutions,” says the government’s new climate plan, titled, “A Healthy Environment and A Healthy Economy.”

The tax already was expected to hit $50 a tonne in 2022. With this new initiative, the tax will now increase by $15 a tonne each year for the next eight years in order to wean consumers off fossil fuels in favour of cleaner energy sources.

The tax hike will result in higher costs for consumers when they buy gasoline. The price at the pump will increase by 37.57 cents a litre by 2030 as a result of this new plan, and the cost of light fuel oil for home heating, natural gas and propane will rise as well.

To compensate for the cost-of-living increase, the government said it will continue to return most of the money collected by this program through rebates.

Under the current system, the money is returned to individuals and families annually through the ‘Climate Action incentive payment’ when they file tax returns. Starting in 2022, the carbon pollution rebate payments will be distributed on a quarterly basis.

Beyond the carbon tax hike, the government is promising $15 billion in new spending on climate initiatives over the next 10 years.

The government says it will spend $2.6 billion over seven years, starting in 2020-21, to help homeowners improve the energy efficiency of their homes through about 700,000 home improvement grants worth up to $5,000 each. The government also says it will pay for one million free EnerGuide energy assessments.

The government also is promising to invest $287 million over two years to continue an existing program that provides incentives to people who buy zero-emissions vehicles. The program provides a rebate of up to $5,000 to consumers who buy “light duty zero-emissions” vehicles.


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