Is the carbon tax suffering from a failure to communicate?

March 14, 2024 Canuck

Attacks on the carbon tax are both easy and counterintuitive.

The federal price on carbon, implemented in 2019, is still relatively new. After a period of unusually high inflation, Canadians are newly sensitive to the price of goods and necessities. And the carbon tax, by design, increases each year (on April 1, in fact).

Meanwhile, the benefits that derive from putting a price on carbon, and the greater economic and environmental harm that might result from lacking such a policy, are not immediately tangible — although Canada’s greenhouse gas emissions are falling.

So when Conservative leader Pierre Poilievre encourages his supporters to chant “axe the tax” and “spike the hike,” he’s aiming at an easy target.

But unlike most other taxes, and everything else that could be said to be contributing to the cost of goods, the carbon tax comes with a rebate. In fact — as its proponents like to point out — it’s estimated that most households receive more from the rebate than they pay in added costs created by the tax.

Given that most people — particularly those with lower incomes — are expected to receive more from the rebate than they pay in additional costs, many households might actually end up worse off if the carbon tax is repealed.

For the sake of comparison, consider federal excise taxes on fuel, which long predate the carbon tax. Since 1995, the excise tax has added 10 cents to every litre of gas. The resulting revenue is not rebated directly to households (although some people with a mobility impairment can apply for a partial refund).

But no opposition leaders or premiers are clamouring right now for Prime Minister Justin Trudeau’s government to repeal those excise taxes — perhaps because they generate $5 billion annually for the federal government, $2 billion of which is distributed to provinces to fund municipal infrastructure.

But the political value of carbon tax rebates depends on Canadians being aware that they’re receiving them. A lack of public awareness might explain why the federal government recently changed the name of the payment from the Climate Action Incentive to the Canada Carbon Rebate.

If a rebate falls in a bank account and no one hears it

In January, Abacus Data asked Canadians in provinces where the federal carbon tax is applied whether they had received a payment from the federal government in the past week. Of the 49 per cent who said yes, the vast majority correctly identified it as a rebate connected to the carbon tax. But that still left 51 per cent who said they hadn’t received a rebate.

In fact, the federal government sent carbon rebates to 12 million Canadians in January.

That finding by Abacus might be affected by the fact that, in the case of married and common-law couples, only one person receives the rebate. But the result only gets slightly better for the Liberal government when the question is worded more broadly. In November, a quarter of respondents told the Angus Reid Institute that neither they nor their household had received a rebate in the past year. (Another 12 per cent weren’t sure.)

Even among those who had received a payment, 54 per cent said they paid more in the carbon tax than they received in rebates.

Several factors may be undermining the Liberal government’s communication efforts. While energy suppliers specify the federal carbon charge on the bills they send to customers, banks are not obliged to clearly label the rebates when deposits are made to Canadians’ accounts.

But when David Coletto at Abacus released his findings in January, he suggested another possible explanation — the restrictions on government advertising the Liberals implemented in 2016.

Prime Minister Stephen Harper reacts to a journalist's question during a press conference in which he announced an extension to the deadline for the Economic Action Plan in Mississauga, Ont., Dec. 2, 2010. — Prime Minister Stephen Harper attends a press conference on the Economic Action Plan in Mississauga, Ont., on Dec. 2, 2010. (Chris Young/The Canadian Press)

From 2009 to 2015, the previous Conservative government spent tens of millions of dollars promoting what it called “Canada’s Economic Action Plan” — a slogan used at first to promote the government’s belated response to the Great Recession and then applied to a broad swath of Conservative policy. The opposition parties howled at the use of public funds to promote the sitting government.

When the Liberals came to office they not only slashed spending on advertising, they also created new rules and oversight to limit how government advertising could be used. Ads produced by the federal government are now required to be “objective, factual and explanatory” and cannot be “self-congratulatory or self-praising in nature.”

Is this a failure to communicate?

If you want to know how persnickety the non-partisan reviewers of ads can be, the changes to ad scripts are posted publicly. In 2019, an ad proposed by the Canada Revenue Agency was flagged because one phrase — “the new Climate Action Incentive is making a cleaner economy more affordable for everyone” — was deemed to be self-congratulatory.

It’s impossible to know exactly what the Liberals might have done in the absence of those rules. It’s possible that the carbon tax and rebate would now enjoy better support (or at least broader awareness) if it had been promoted like the Economic Action Plan.

But if it was a gross abuse of public funds when the Conservatives did it, it would be a gross abuse of public funds now. (Coletto was not specifically recommending that kind of massive advertising campaign.)

Perhaps there’s some acceptable middle ground between the relatively restrained advertising of recent years and how government advertising budgets were used in the past. But the Liberal government’s struggles to defend the carbon tax might simply indicate new challenges all governments face in communicating with voters — another idea Coletto has written about in recent months.

Convincing voters to accept a new tax (even with a rebate) might be an eternal challenge (Brian Mulroney knew this well). The fragmented media environment of 2024 might make it even harder. But if gaps in public awareness suggest the Liberals need to make more of an effort, it doesn’t necessarily follow that such an effort needs to involve government ads.

It’s also fair to ask whether the arguments Trudeau’s government has made have been good enough.

WATCH: Prime Minister Justin Trudeau defends carbon tax in Alberta

Trudeau defends carbon tax policy as premiers call for pause on increase

1 day ago

Duration 2:31

Speaking in Calgary, Prime Minister Justin Trudeau said ‘short-term thinker politicians’ are the ones rallying against the Liberal government’s price on pollution.

In fairness to the Liberals, they might have assumed the carbon tax debate ended with the 2021 election — when the Conservatives, including Poilievre, ran on a platform that included a proposal to put a price on carbon. But just how much of the fight remains to be fought was demonstrated when Trudeau spent more than seven minutes in Calgary on Wednesday responding to a reporter’s question about the carbon tax.

“Your question, Rick, is sort of, well, that all makes sense, why are so many people still against it?” Trudeau said to the Calgary Sun’s Rick Bell after laying out the logic behind the federal government’s decision to implement a carbon tax. “Well, that’s a question that we all have to ask.”

Maybe that’s a question for everyone to ask. But it’s most pertinent for Trudeau himself.

In response to an earlier question about the carbon tax, Trudeau said he understood that there’s a lot of “political misinformation and disinformation” about the policy. But if “misinformation” is polluting the debate, that only increases the burden on Liberals, as the authors of the policy, to cut through it.

Voters may ultimately decide they don’t want the carbon tax. If that happens, the first question to be asked will be whether Trudeau and his government did enough to sell it.

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