Carbon pricing accounts for 0.15 percentage points of inflation, BoC governor says
CTV
Canada's price on carbon only contributes 0.15 percentage points to inflation, Bank of Canada Governor Tiff Macklem reiterated on Thursday amid claims by the federal Conservatives that the pricing plan is a significant driver behind inflation.
Canada's price on carbon only contributes 0.15 percentage points to inflation, Bank of Canada Governor Tiff Macklem reiterated on Thursday.
Macklem first cited the figure to the Standing Committee on Finance in February, but repeated it while speaking to the Calgary Chamber of Commerce on Sept. 7, amid claims by the Conservatives that the federal carbon pricing plan is a significant driver behind Canada's high inflation rate.
"The carbon tax goes up periodically and when we forecast inflation, we know what the carbon tax is going to do, so yeah, we build that into our forecast just the way we build in other fiscal decisions," Macklem said on Thursday.
"The contribution that's making to inflation one year to the next is relatively small. If you want me to put a number on it, it's in the range of 0.15 per cent, so quite small."
The federal carbon price rose on April 1 by $15 per tonne, to $65: the most recent in a 12-year timeline to lift the price to $170 by 2030.
Carbon pricing is based on the idea that higher fuel costs will result in lower usage and an overall decrease in emissions. To counterbalance the impact of those higher costs, the federal government issues rebates to Canadians in the form of the climate action incentive payment.
According to a 2022 report by Parliamentary Budget Officer Yves Giroux, raising the carbon price to $170 per tonne by 2030 will eliminate an additional 96 million tonnes of emissions – equivalent to the emissions of 21 million passenger cars – compared to the current rate of $50 per tonne.
