Q&A | Carbon tax refunds are coming Monday. Here's what you need to know

Larry Short is a wealth advisor with ShortFinancial, a company with offices in St. John's and Toronto that offers investment and financial advice. He says most Canadians are getting more money back than they're paying because of the carbon tax. (CBC)

This year's first round of quarterly carbon rebates are scheduled to paid out to Canadians on Monday.

But Larry Short, a senior wealth advisor with ShortFinancial and IA Private Wealth, says many won't even know the money has arrived — partly because it goes to just one person in a household and isn't identified as the carbon tax rebate by banks.

Short sat down with St. John's Morning Show host Krissy Holmes to discuss misinformation about the rebates and the carbon tax, and how most people will be worse off without it.

Q: We do know the first run of cheques, the Canadian carbon rebate cheques, are coming out next week. I think a lot of people are still scratching their head over whether this is better or worse for them. How do we sort through the rhetoric?

A: Well, I can tell you that 70 per cent of Canadians do hate the carbon tax. [But] 80 per cent of those listening will lose money if the carbon tax is cancelled.

What people are really angry about is not the carbon tax; they're angry at the cost of living has increased, and they think that the carbon tax caused the cost of living to go up.

But it wasn't the carbon tax that drove up a box of Cheerios by two dollars since 2019. It was a coincidence that there was a change in carbon tax in 2019, then we had inflation.

People, in the absence of other information, said it must be the carbon tax because I can see it cost me $0.17 more at the pump, so that must be going through the entire economy and driving up the cost of living. That's not the case.

The clear evidence that it's not the case is the fact that both Australia and the United States had higher inflation over the last number of years than Canada did. And neither of those countries have a carbon tax. Carbon tax contributed 0.15 per cent to the inflation rate when inflation was eight per cent.

Then the other thing that people are completely confused about is everybody gets the rebate. There is nothing to do with how much money that you make. So the prime minister gets the rebate, the leader of the opposition, the premier of the province, everybody gets that rebate, but they don't see it.

And because they don't see it, they don't believe that they get the rebate.

You just said 80 per cent of people will lose money if this goes away. What's happening with those 80 and what happens to the other 20 per cent?

So let's start with with why people don't see the rebate to begin with.

It's because it goes out on a quarterly basis.In many cases, it goes into the bank account and it is horribly encoded by the banks.

The banks have electronic "Funds Transfer Canada' as one line or they have something else completely confusing. So when people look into their bank statements, they are not seeing it. $596 comes to you if you're living in the city in the run of the year. Divide that by four, it's about $149 per a single person.

If you're not married or not in a common-law relationship, you don't file your taxes together, you get $600 in a run of year.

If you do file your taxes together, then you and your spouse get another $300. So you get $900 back as a rebate.

Now here's to make life interesting: whichever the spouse files first gets the rebate, the other person doesn't see it.

What?

Yeah — there's one major criticism, is the technical detail of how this was put together.

A couple with a child, another $150. A single parent with a child: $900. If you're outside a city, you get another 20 per cent more.

So for a family of four, it's about $1100.

Talk to me about the 80 per cent. So you you said 80 per cent of people are better off?

It takes about 12 litres to drive 100 kilometres. You're still getting enough back from the rebate to cover your cost of the carbon taxes.

All the people are seeing is $0.17 at the pump. But if you take that $0.17, multiply it by how many kilometres and then you got to multiply it by how many litres it takes to drive those kilometres.

And for 80 per cent of the people that are listening, they are driving less than 30,000 kilometres in run of the year. If you're in town in particular, you're significantly less.

The average Canadian is driving less than 15,000 kilometres. So that's where that 80 per cent comes from.

How is the government basing this payout? What is it based on?

Nothing. You file an income tax return, you get it.

The part that I still don't understand, is how does giving all this money back in the form of a rebate actually fight climate change?

The biggest single demand for vehicles in the province of Newfoundland and Labrador are hybrids. Because, if it takes 12 litres to drive 100 kilometres [in a gas-powered car], on a hybrid, you're somewhere around six [litres]. So it saves you on gas up front.

What you're targeting is those people who can afford to buy a $60,000 hybrid versus buying the same vehicle at $40,000.

They're trying to nudge people to go to electric vehicles and hybrids in order to get the consumption of gasoline down.

Is it about increasing demand and supply bringing costs down?

Let's go the other way; who's hurting on this thing?

If you have a large vehicle that you're towing your powerboat in, you're underwater. If you are spending more than the average person and consuming more than average fuel, then you are losing money.

But the average person in this province, 80 per cent of them, are getting more money back from the credit.

So the top spenders are going to be incentivized?

The people who are wealthy, they're incentivized to go and put heat pumps in their homes, and incentivized to put solar panels.

Now, it doesn't work so much in Newfoundland because hydro power is the primary source here, but in the rest of the country [it's] to reduce demand for electricity that's produced by coal or oil.

Well, that makes more sense.

It's a lack of information. The only thing that people see is prices of food gone up, the carbon tax came in and that must have been the cause of it.

Dig into it a little bit further and you'll see that there's actually money showing up in your bank account.

Download our free CBC News app to sign up for push alerts for CBC Newfoundland and Labrador. Click here to visit our landing page.