A carbon tax is on the table as Ottawa plans to implement a new levy on alcohol that will apply to all products sold in the country.
A new levy would add to the roughly $3.8-billion revenue the government collected from the sale of alcohol in 2016.
The tax is the first step in a plan by Ottawa to phase in the tax, and it is expected to bring in $8 billion over the next four years.
“It’s a way to support the economy and create jobs,” said Andrew Wilkinson, minister of economic development, jobs and growth.
The carbon tax, which has been in the works since late 2017, will cost an estimated $100 a tonne and apply to every product sold in Canada.
It will also apply to the country’s wine industry, and will be a tax on alcohol produced and sold by the provinces.
A carbon levy is a tax that increases taxes on goods and services to generate revenue to fund infrastructure and social programs.
The first phase of the carbon tax will kick in Jan. 1, 2019.
It is expected that the levy will generate $7.6 billion annually, about $1.8 billion of which will be collected from a carbon levy and $2.5 billion from the provincial sales tax.
Another $2 billion will be allocated to support programs such as education, health and disability assistance, housing, affordable housing and affordable child care.
“These revenues will be used to help finance important social programs, such as housing, child care, disability support and affordable housing,” said Wilkinson.
“And, we’ll have a new tool to ensure that all Canadians, regardless of income, can enjoy the benefits of our economy, such that they can keep up with their families.”
The new levy will also be used for an ambitious $100-a-tonne carbon capture and storage system, which will capture carbon dioxide from the atmosphere and use it to produce electricity.
“We’re also going to invest in public transit to make our city and our region more accessible, so we can provide people with the necessary infrastructure to get around the province,” said the minister.
“So it’s going to be a very significant program.”
The carbon levy will apply only to the first year of the levy.
If it was rolled out over the four years, it would raise an estimated additional $7 billion, according to a presentation from the province’s minister of economy and trade.
The province has said it will not use the new revenues to implement any new taxes on alcohol.
That money would go towards building new roads and bridges and supporting social programs such a seniors and child care services.
The minister said the carbon levy would not impact provincial revenue, but it would affect what other taxes are applied.
“If we apply the carbon to all beverages, it will impact the sales tax, the fuel tax, some other taxes,” said Mr. Wilkinson.
The federal government has already announced it will impose a tax of up to $10 a ton on gasoline.
A federal carbon tax would be introduced in Ontario this fall, which would apply to gasoline, diesel, unleaded gasoline and light-duty vehicles.
That tax would also be phased in over four years beginning Jan. 31, 2020.
The Ontario government has also indicated it would impose a carbon-pricing regime, which is similar to a carbon market that was implemented in the U.S. in 2019.
The provincial government is expected also to introduce a carbon price and carbon capture levy.
The provinces have also indicated they would be introducing a new provincial carbon tax.
Mr. Balsillie, who is responsible for the federal government’s climate change strategy, said the provinces have not decided what kind of tax to implement.
“There are no formal announcements at this point,” he said.
The government will also begin to roll out carbon-capture measures on private property.
The new carbon-collection regime will also provide new opportunities for provinces to attract more investment to their economy.
The revenue from the carbon-collecting and carbon-disposal regime will go towards infrastructure, the province said.
“This will help us continue to grow the economy in the short term and help to create jobs in the long term,” Mr. Bell said.