441-00948 (Taxation)

Climate action is critical to Canada’s long-term health and economic prosperity. Pollution pricing is widely recognized as effective and the most efficient means of reducing our greenhouse gas emissions, which is why the Government of Canada has made sure that it is no longer free to pollute in Canada.

The federal price on pollution is revenue neutral for the federal government; the direct proceeds from the federal pollution pricing system remain in the province or territory where they are collected. Put simply, every dollar collected from the pollution price is returned.

In Yukon and Nunavut, the direct proceeds from the federal fuel charge are returned to the governments of these jurisdictions. In provinces that do not have a fuel charge consistent with the federal benchmark – Ontario, Manitoba, Saskatchewan and Alberta – 90 percent of direct proceeds from the federal fuel charge are returned to residents of those provinces through Climate Action Incentive (CAI) payments. Most households receive more in CAI payments than the costs they face from the federal price on pollution. The other 10 percent is used to support small businesses, farmers and Indigenous groups.

In 2023-24, the federal fuel charge will continue to apply in these provinces, and will come into effect as of July 1, 2023 in Newfoundland and Labrador, Prince Edward Island, and Nova Scotia, where 90 percent of direct proceeds will be also returned to residents through Climate Action Incentive payments. Starting in July 2023, a family of four will receive $328 in Newfoundland and Labrador, $240 in Prince Edward Island and $248 in Nova Scotia each quarter; starting in April 2023, such a family will receive $244 in Ontario, $264 in Manitoba, $340 in Saskatchewan, and $386 in Alberta on a quarterly basis. Families in rural and small communities are eligible to receive an extra 10 percent. Some 8 out of 10 families receiving Climate Action Incentive payments get more money back than they pay in direct costs under this system, with families that earn less benefitting the most, on average.

With respect to the federal excise tax on gasoline of 10 cents per litre, this rate has remained unchanged since 1995. This rate does not vary with the retail price of gasoline.

To support those most affected by inflation, as of November 4, 2022, an estimated 11 million low- and modest-income people and families received an additional GST Credit payment, equivalent to doubling the credit for six months. Single Canadians without children received up to an extra $234, and couples with two children received up to an extra $467. Seniors received an extra $225 on average.