Environmental taxes in Canada, 2021
Released: 2024-12-10
$31 billion
2021
The total environmental taxes generated in Canada reached $31 billion in 2021, up 17.0% from $26 billion in 2020, primarily due to an 18.8% increase in total energy taxes. Total energy taxes includes energy and fuel for transport taxes, carbon taxes and emission trading permits.
The increase in total energy taxes was driven, in turn, by a 90.4% increase in the revenue from emission trading permits from 2020 to 2021. This year-over-year growth was attributable to the carbon pollution pricing system, which has allowed the federal government to collect environmental taxes from provinces and territories to reduce greenhouse gas emissions since 2019, under the Greenhouse Gas pollution Pricing Act.
Chart 1
Composition of environmental taxes collected in Canada, by tax type
Energy taxes account for over three-quarters of environmental tax revenue
Of the $31 billion collected in environmental taxes in 2021, $24 billion (78.0%) was attributable to energy taxes. The share of taxes attributable to transportation taxes edged down 1.1 percentage points to 18.8%, while the share of natural resource taxes (2.6%) and pollution taxes (0.6%) were unchanged from 2020 to 2021.
Within the energy tax category, the share of the carbon tax increased from 21.2% in 2020 to 25.6% in 2021, while the share of emission trading permits rose from 4.4% to 7.1%.
Chart 2
Composition of energy tax revenue in Canada
The industry sector accounts for the largest share of environmental taxes, led by the truck transportation industry
The majority of environmental tax revenue came from the industry sector, accounting for 56.1% ($17 billion) of all environmental taxes in 2021. Households followed, at 43.4% ($13 billion) of all environmental taxes paid, down 2.8 percentage points from 2020.
Within the industry sector, the truck transportation industry had the largest share of environmental taxes (9.7%) in 2021, followed by wholesale trade (2.5%) and retail trade, excluding cannabis (1.9%).
Energy and fuel for transport taxes accounted for almost two-thirds (63.5%) of all the environmental taxes paid by the truck transportation industry in 2021—mainly on diesel and biodiesel fuels, motor gasoline and natural gas.
Environmental taxes in the industry sector up sharply in the territories
Regionally, the territories saw larger year-over-year growth in total environmental taxes, driven by carbon taxes under the Greenhouse Gas Pollution Pricing Act in the industry sector. Environmental taxes rose the most in Yukon (+32.2%) and Nunavut (+31.6%).
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Note to readers
The Environmental tax statistics (ETS) product provides annual estimates of environmental taxes in current dollars at the national level and by province and territory for the 2021 reference year.
The ETS measures the revenue received by governments from environmental taxes paid by the industry sector (industries, government institutions and non-profit organizations) and households, as well as through gross fixed capital formation.
This product records transfers from businesses and households to governments and does not record any returns, such as the carbon tax rebate that is received by households in some provinces.
Results for the ETS are in line with Statistics Canada's environmental taxes submission to the International Monetary Fund. Discrepancies may arise mainly from presenting the ETS estimates by calendar year rather than by fiscal year.
This product records revenue captured, under the Greenhouse Gas Pollution Pricing Act, through the federal carbon pollution pricing system, which consists of two main parts: the fuel charge and the Output-Based Pricing System.
The environmental tax amounts are reported for four main categories: energy taxes, transportation taxes, pollution taxes and natural resource taxes. Energy taxes can also be broken down into three subcategories: taxes on energy and fuel for transport, the carbon tax, and emission trading permits. The carbon tax is a tax charge placed on greenhouse gas emissions released mainly from burning fossil fuels. Taxes on greenhouse gas emissions other than carbon dioxide are also included. Emission trading permits enable government revenue to be recorded from the auctioning of emission permits (also known as "cap and trade"), which are treated as taxes on production in the national accounts.
Development of this product follows the United Nations System of Environmental-Economic Accounting 2012—Central Framework. For more information, see the page Canadian System of Environmental-Economic Accounts—Environmental tax statistics (ETS).
Definition
Environmental taxes: For the purpose of this product, environmentally related taxes are those in which the tax base is a physical unit (or a proxy of it) of something that has a proven, specific, negative impact on the environment (as per the United Nations definition).
Contact information
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