A tale of 2 taxes: how carbon pricing and revenue rolls out in Alberta versus Sask.

While Alberta’s NDP government rolled out its carbon pricing plan at the start of 2017 and has collected billions through it, Saskatchewan has ended up with a federally-imposed plan that just came into effect on April 1.

Researchers are comparing the benefits and trade-offs of different carbon pricing plans

New research is comparing how carbon pricing plans work across the country, and what the trade-offs are of different approaches. (Nicolas Amaya/CBC)

While Alberta's NDP government rolled out its carbon pricing plan at the start of 2017 and has collected billions through it, Saskatchewan has ended up with a federally-imposed plan that just came into effect on April 1.  

Now, researchers in the two provinces are comparing the benefits and drawbacks of the two plans.

According to economist Brett Dolter, with the University of Regina, carbon pricing generates money and that money can be recycled back to help lower-income households, stimulate the economy, or used to further reduce emissions.

Dolter said he hopes new research will help move the carbon tax discussion from one about whether or not to price it, to one about how the revenue is best spent.

"I think that's an interesting discussion to have and a more productive discussion in my mind than just always talking about should we have [carbon pricing] or not."

People in provinces across the country would pay different amounts of the tax, based on a number of factors, including the costs to heat homes and sources of energy generation. This table, from a report authored by the University of Calgary's School of Public Policy's Jennifer Winter, uses Statistics Canada data to estimate carbon pricing costs at $50 a tonne. (Jennifer Winter/University of Calgary)

Dolter is teamed up with researchers Jennifer Winter and Kent Fellows with the University of Calgary School of Public Policy to compare the two approaches.  

Alberta's NDP government estimated carbon pricing would bring in $2.6 billion by the end of March, since it first came into effect. Under that plan, money flows back into a mix of consumer rebates, public transit, coal phaseouts, tax reductions and more.

If elected in next week's provincial election, the United Conservative Party is promising to get rid of Alberta's carbon tax. That would mean the federal backstop would eventually kick in, at $20 per tonne until 2020  — $10 less than Alberta's current rate. 

Alberta's approach is different from Saskatchewan's since not everyone gets the rebate.

Single people earning less than $47,500 a year, or families earning less than $95,000 a year, receive a full rebate to help offset costs of the carbon levy. Households earning more than $100,000 do not receive rebates.

The provincial carbon tax website contains a prediction that about 60 per cent of Alberta households would get full or partial rebates.

This graph from the Ecofiscal Commission, an independent body formed by economists, shows how different provinces are recycling revenue from carbon pricing. The backstop program at right reflects the federal government's plan, which is in effect in Saskatchewan. (Canada's Ecofiscal Commission/Twitter)

How it works in Saskatchewan 

The federal government's plan, which applies in Saskatchewan, prices carbon at $20 per tonne. This price will rise to $50 by 2022. In this plan, nearly 90 per cent of money collected from rebates goes back to households.

The rebate is not tied to household income, meaning nearly everyone in Saskatchewan will qualify for a rebate this year, unless they were not a resident of Canada in 2018 or if they spent any time in prison.

The average individual in Saskatchewan would be eligible to receive roughly $300, with an average household of two adults and two children receiving a return of roughly $600.

A chart from Department of Finance Canada shows what people in four different provinces would receive in rebates. (CBC)

Dolter said the research will compare people's carbon costs across income categories. It also will compare a few factors, including how progressive the policy is in terms of helping out lower-income households and how it impacts economic growth. It will also look at a third factor, on how some provinces might use the revenue generated from carbon taxes to try and reduce emissions further. 

A graph from the University of Regina's Brett Dolter shows what the breakdown could look like for carbon tax costs in Saskatchewan across income categories in 2019, with carbon pricing set at $20 per tonne. (Submitted by Brett Dolter)

"We'll try to highlight those tradeoffs and I hope that then politicians and policymakers pick up on that and have a discussion about what is the best way to recycle the revenue," he said.

Dolter said the researchers will have results for Saskatchewan by the end of May, followed by a deeper dive into what carbon pricing means to provinces like Alberta, Ontario, New Brunswick and Manitoba to really take "a broader look across the country."