An industrial carbon tax only affects large producers; consumers are immune.

Context#

Politicians often claim that carbon taxes target "big polluters" while ordinary families are protected. This is economically illiterate. Every carbon tax is ultimately paid by consumers through higher prices.

Evidence#

Basic Economics: Taxes Are Passed Through

How carbon taxes actually work:

1. Government taxes producer for emissions
2. Producer's costs increase
3. Producer raises prices to maintain margins
4. Consumer pays higher price
5. Tax is fully passed through the supply chain

This isn't theory—it's how every business operates. No company absorbs costs indefinitely. They pass them on or go bankrupt.

The Canadian Carbon Tax: What You Actually Pay

Direct costs (at the pump):

• Carbon tax adds 17.6 cents/litre to gasoline (2024)
• Rising to 37 cents/litre by 2030
• Family with two cars: $600-1,200/year in direct fuel costs

Hidden costs (embedded in everything):

The "Rebate" Myth

Politicians claim:

"Most families get more back than they pay"

Reality:

• Rebates only offset direct carbon tax
• Hidden costs in goods/services NOT rebated
• Parliamentary Budget Officer: Most families pay more than they receive
• Administrative costs reduce money available for rebates
• Rebates don't grow as fast as the tax

PBO Analysis (2024):

• Average family in Alberta: Net cost of $2,773/year (including economic impact)
• Saskatchewan: Net cost of $2,084/year
• Ontario: Net cost of $1,820/year

The rebate is a political shell game.

Every Price Increase Traces Back

Your morning coffee:

• Coffee beans: Shipped by oil-powered vessel, trucked to roaster
• Roasting: Natural gas or electricity (taxed)
• Packaging: Petroleum-based materials, manufacturing emissions
• Transport to store: Diesel truck (taxed)
• Store operations: Heating, cooling, lighting (taxed)
• You pay: Higher price for coffee

Multiply this by every product and service you buy.

Who Pays Most? Lower-Income Families

Carbon taxes are regressive:

• Energy is a larger share of low-income budgets
• Can't afford EVs or heat pumps to "switch"
• Live in older, less efficient housing
• Longer commutes (affordable housing is farther out)
• Rebates don't cover actual costs for struggling families

The cruelty:

• Wealthy can absorb costs or switch to alternatives
• Middle class squeezed from all directions
• Poor pay higher share of income, get inadequate rebates
• Rural families hit hardest (no transit alternatives)

Industrial Carbon Tax: The Extra Lie

For "large emitters" systems:

• Industry passes costs to business customers
• Business customers pass costs to consumers
• You pay twice: Consumer carbon tax + embedded industrial carbon costs
• Supply chains multiply the impact

Example: Cement

• Cement production is carbon-intensive
• Industrial carbon price increases cement costs
• Construction costs rise
• Housing prices rise
• Rent increases
• Consumer pays

What "Revenue Neutral" Actually Means

The claim: "All carbon tax revenue returned to citizens"

The reality:

• Government skims administrative costs
• Economic damage isn't compensated
• Lost jobs don't get rebates
• Investment leaving Canada isn't refunded
• Reduced economic growth hurts everyone

The Impact on Canadian Competitiveness

When Canada taxes carbon and competitors don't:

• Canadian products cost more
• Manufacturing moves elsewhere
• Jobs follow the factories
• "Carbon leakage": Same emissions, different country
• Canada poorer, planet no better off

Industries at risk:

• Steel and aluminum
• Cement and concrete
• Chemicals and fertilizers
• Oil and gas (obviously)
• Any trade-exposed sector

What Happens to Food Prices

Farm inputs affected by carbon tax:

• Diesel for tractors and equipment
• Natural gas for grain drying
• Fertilizer (carbon-intensive to produce)
• Transport to market
• Processing and packaging

Result:

• Canadian farmers' costs rise
• Food prices rise
• Imports from non-carbon-taxed countries become competitive
• Canadian agriculture disadvantaged
• Families pay more for groceries

Analysis#

This claim is false—dangerously so, because it's used to sell carbon taxes to a public that doesn't understand who really pays.

There is no such thing as a tax that "only affects producers." Every tax on business inputs becomes a tax on consumer outputs. This is economics 101, yet politicians pretend otherwise because telling voters "we're raising the price of everything you buy" doesn't win elections.

The carbon tax is a consumption tax that hits hardest on:

• Heating your home
• Driving to work
• Buying groceries
• Every product and service in the economy

The rebate system is designed to obscure this reality. You get a cheque and feel like you came out ahead—while ignoring the hundreds of invisible price increases embedded in your daily life.

When politicians say "big polluters will pay," what they mean is "big polluters will pass costs to you, and we hope you don't notice." The carbon tax is a tax on living, and consumers pay every cent of it.