The Canadian province of Manitoba (1.4 million inhabitants) has decided to introduce a flat CAD 25/tCO2 (US$19/tCO2) carbon tax as of 1 July 2020, and to cut the provincial sales tax (PST) from 7% to 6%, saving Manitobans CAD325m/year (US$242m/year), i.e. CAD40m (US$30m) more than the cost of the carbon tax.
Manitoba initially proposed to implement a CAD 25/t carbon tax in 2017 but cancelled its plans when the federal government deemed this level too low. Canada's federal "backstop" mechanism - a CAD 20/t (US$15/t) carbon tax - thus applied to Manitoba and other provinces without any provincial carbon tax (Ontario, New Brunswick and Saskatchewan) as of April 2019. The government of Manitoba immediately filed a court action over this federal mechanism.
Manitoba hopes the Federal Court to rule out the federal carbon tax, which will raise by CAD 10/t in April every year until reaching CAD 50/t (US$38/t) in 2022-2023. The provincial carbon tax should enable the average Manitoban household to save CAD200 (nearly US$150) in 2022 and around CAD700 (about US$520) over the next five years.
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