Nova Scotia residents will begin to feel the pinch at the pump starting July 1, 2023, as new environmental and carbon taxes come into effect. These taxes are part of broader initiatives by the federal government to combat climate change and achieve net-zero emissions by 2050.
According to recent estimates, the price of gasoline per litre in Nova Scotia is expected to rise by about 14 to 17 cents due to the implementation of the federal carbon tax1. This increase will be coupled with the impact of the Clean Fuel Regulations, set to take effect the same day, which are projected to add an additional $0.17 per litre to gasoline prices by 20302.
Understanding the Impact on Gas Prices
The carbon tax, imposed by the federal government, will be applied to all fossil fuels, including gasoline, diesel, and home heating fuel. This tax is part of a broader plan to incentivize a shift towards renewable energy sources and reduce greenhouse gas emissions.
Simultaneously, the Clean Fuel Regulations, often referred to as the “second carbon tax,” aim to reduce the carbon intensity of fuels by requiring fuel suppliers to decrease the amount of carbon per unit of energy in their products by about 15% below 2016 levels by 2030.
The Toll of Taxes on Consumers
It’s important to note that these figures represent direct tax increases. However, Nova Scotia’s 15% Harmonized Sales Tax (HST) will also apply to these added costs, contributing an additional estimated 5 cents per litre by 2030.
Therefore, by 2030, Nova Scotia residents can expect to see an estimated total increase of approximately 39 cents per litre in gasoline prices due to these taxes and the HST on these taxes.
A Look Ahead: Gas Prices from 2023 to 2030
Here is a chart illustrating the estimated increase in gasoline prices due to these taxes from 2023 to 2030:
- 2023: Initial increase of $0.17 per litre due to carbon tax.
- 2024 – 2029: Gradual increase due to the Clean Fuel Regulations, reaching an additional $0.17 per litre by 2030.
- 2030: Total direct tax increase reaches $0.34 per litre. With the HST, the total cost added to each litre of gasoline is approximately $0.39.
Despite the additional financial burden for consumers, these measures reflect the federal government’s commitment to mitigating climate change and transitioning to cleaner energy sources. As we navigate this transition, it’s important for consumers to understand the cost implications and consider more sustainable options for transportation and energy use.
Please note that these figures are estimates, and actual prices may vary.
Addendum 1: Explaining the Carbon Tax Increase
The standard federal carbon tax in Canada is set to increase by $15 per tonne annually from 2023 through 20301. Given that the carbon tax has been increasing the price of gasoline by approximately $0.025 per litre for each $10 increase per tonne of carbon dioxide equivalent (CO2e)2, it’s possible to calculate the expected increase in the price of gasoline due to the carbon tax by the year 2030.
Here’s how:
- The carbon tax will increase by $15 per tonne per year from 2023 to 2030, for a total increase of $120 per tonne over this period (8 years * $15/tonne/year = $120/tonne).
- For each $10/tonne increase in the carbon tax, the price of gasoline increases by approximately $0.025 per litre.
- Therefore, a $120/tonne increase in the carbon tax would increase the price of gasoline by approximately $0.30 per litre ($120/tonne * $0.025/litre/$10/tonne = $0.30/litre).
So, by 2030, the standard federal carbon tax is expected to increase the price of gasoline by an additional $0.30 per litre compared to 2023 levels.
Addendum 2: Additional Increase to Carbon Taxes
The previously reported expected increases in gasoline prices due to new carbon taxes have been updated to take into account the planned increases in the federal carbon tax from 2023 to 2030.
In addition to the initial increase of $0.17 per litre due to the carbon tax in 20231, the federal carbon tax is expected to add an additional $0.30 per litre to the price of gasoline by 2030. This increase is based on the planned annual increase in the carbon tax of $15 per tonne from 2023 through 2030, which amounts to a total increase of $120 per tonne over this period2. Historical data indicates that each $10 per tonne increase in the carbon tax leads to a roughly $0.025 per litre increase in the price of gasoline3.
The Clean Fuel Regulations, or the “second carbon tax,” are still projected to add an additional $0.17 per litre to gasoline prices by 20304.
Taking into account Nova Scotia’s 15% Harmonized Sales Tax (HST), the total cost added to each litre of gasoline due to these taxes and the HST on these taxes by 2030 would be calculated as follows:
- Direct increase due to the carbon tax: $0.17 (2023) + $0.30 (additional by 2030) = $0.47/litre
- Direct increase due to the Clean Fuel Regulations: $0.17/litre (by 2030)
- Total direct tax increase: $0.47/litre (carbon tax) + $0.17/litre (Clean Fuel Regulations) = $0.64/litre
- HST on the added taxes: 15% of $0.64 = $0.096/litre
- Total cost added to each litre of gasoline: $0.64/litre (direct tax increase) + $0.096/litre (HST) = approximately $0.736/litre
Therefore, by 2030, Nova Scotia residents can expect to see an estimated total increase of approximately 74 cents per litre in gasoline prices due to these taxes and the HST on these taxes.
Please note that these figures are estimates, and actual prices may vary. It’s also important to remember that Canadians living in jurisdictions where the federal system applies and where the federal government returns fuel charge proceeds through Climate Action Incentive payments will continue to receive rebates that increase each year as the carbon price increases2.
