Government moves to purge consumer carbon tax from law

The Federal Government’s Decision to Repeal Consumer Carbon Pricing

The federal government made a significant move this week by taking steps to eliminate consumer carbon pricing from legislation, effectively bringing an end to a policy that was once a cornerstone of the Liberals’ climate strategy.

In a motion tabled in the House of Commons, the government signaled its intention to repeal the law after using regulations to terminate the consumer carbon price in March. This decision was one of Mark Carney’s first official actions after assuming the role of prime minister. During his leadership campaign, he had criticized the carbon pricing policy as being “too divisive.”

The Conservatives had previously suggested that Carney might reinstate consumer carbon pricing since the law had not been repealed, despite the policy being terminated while Parliament was not in session.

“I call it the carbon tax con job,” stated Conservative Leader Pierre Poilievre during a news conference on the day the consumer carbon price was canceled by Carney. He further alleged that Carney would bring back the policy without any rebates if re-elected.

In March, Carney utilized a regulation to reduce the consumer carbon price to zero. However, the government is now moving forward with the repeal of the law that supported this policy, effectively bringing it to an end for good, along with the rebates that Canadians had been receiving.

A report from the Canadian Climate Institute in 2024 revealed that consumer carbon pricing would result in fewer emissions reductions compared to a pricing system targeting major industrial emitters. The industrial pricing system accounted for approximately 80% of the total emissions reductions achieved through carbon pricing.

Carney has committed to enhancing the industrial policy, although the specifics and timeline for this enhancement remain unclear.

Canadian oil and gas companies have urged Carney to also repeal the industrial carbon price, citing concerns that it has put them at a competitive disadvantage against foreign oil and gas producers.

The government’s plan to repeal the consumer carbon pricing section of the law includes retroactively nullifying all charging provisions from April 1, 2025, to align with the regulatory changes made in March. Rebate provisions will be repealed as of October, and registration provisions will be revoked, allowing registrants until the end of October to submit rebate claims. All remaining provisions will be repealed effective April 1, 2035.

“This approach aims to provide continuity and certainty for the final wind-down activities, including administrative processes by the CRA that may still rely on existing regulations,” the government document stated.

Despite the repeal of consumer carbon pricing, the CRA will retain the legal authority to make reassessments and require payers to file amended returns for fuel charge obligations that accrued before April 1, 2025, in accordance with the normal limitation periods outlined in the Greenhouse Gas Pollution Pricing Act.