Carbon Tax Will Increase Grocery Prices in Canada: Expert

Date:

Share post:

The carbon tax is now a reality for all Canadians. The federal carbon pricing scheme began in Ontario, New Brunswick, Saskatchewan, and Manitoba on the April 1 deadline, given that these provinces were not in compliance with the new federal law. For Nunavut and Yukon, it will begin on July 1. Everyone else already has a carbon pricing scheme in place. Of course, even if this new tax is paid by businesses, it will surely have an impact on everything we consume, including food.

Gas saw a price increase of 4.4 cents per litre on April 1, a surcharge that is projected to go up to 11 cents a litre by April 2022. This jump will parallel the carbon tax as it gradually increases, based on targets set by the Paris Accord signed in 2015. This is the most obvious, visible indicator of the tax on carbon.

Consumers will get rebates. Depending of where you live, rebates could exceed $500 annually. Lower-income, and often food-insecure households, with lesser carbon footprints, will receive a rebate equal to, and perhaps more than, the increase in the cost of goods with the new tax. This may be good news for a demographic in need of cash, but in the end, we are all likely to see inflation go up, which will eventually hit the prices we find at restaurants and in grocery stores, whether we get rebates or not. Energy is required to get the food we need, but the extent of its impact on food prices remains unknown. One report published in 2012 suggested that the effect of a $50 per tonne carbon tax on food prices would be 3%. For Canada, under the current regime, that would not be until 2022. Given that food prices do go up 1%-2% a year, most years, that number is not unmanageable for most households.

While few of us enjoy paying more taxes, the reality is that climate change has had an impact on food prices for decades now. Over the winter months, its not unheard of to see produce prices go up by as much as 15% in one single month. Nobody knows how much climate change has had an impact on food prices in Canada, but it has clearly caused prices to become much more volatile. There is some consensus on the need to act now, but not all agree on the effectiveness of carbon pricing.

Carbon pricing may discourage food importers from buying certain goods overseas, which will give local food products more of a chance. Based on past research on carbon pricing, there is strong evidence that companies and consumers are influenced by carbon pricing and eventually make alternative choices. These choices end up being better for the environment. Carbon pricing will discriminate against certain food categories for which the carbon footprint is more substantial, no doubt. One might think it’s a desirable scenario, but Canada has a Nordic climate where producing food all year round has its challenges. Consumers have been conditioned to expect cheap food, and that they can go to the market to get whatever they want, whenever they want it. However, Carbon pricing will challenge these notions over time; the types of food available and where they come from will eventually change.

But food in Canada is generally quite affordable compared to other countries around the world. Relative to the cost of living, Canadians have access to one of the cheapest food baskets in the world. What is rarely priced in is the environmental costs, the so-called social costs generated from producing, distributing, and selling food. Some products sold to us are a bargain, given their climatic impact on our planet.

How funds will be spent as a result of more revenues given to Ottawa has been received with a great deal of scepticism. Funds may be redirected to support other, unrelated programs, as we have seen many times before. The bureaucratic machinery in Ottawa can barely be trusted, so discipline and transparency are virtues, especially when dealing with climate change.

In the end, the federal government should be lauded for at least doing something about climate change. Incentivizing companies to reduce GHG emissions through carbon pricing is not a perfect idea, but action is needed. If we do not pay a price for pollution now, the price in the future will likely be much greater. But the implementation of a tax, any tax, is always political. Considering what’s happening with the SNC Lavalin scandal, the implementation of this new tax in key regions across the country is not especially timely for the Liberals.

1 COMMENT

  1. […] “Energy is required to get the food we need, but the extent of its impact on food prices remains unknown. One report published in 2012 suggested that the effect of a $50 per tonne carbon tax on food prices would be 3%. For Canada, under the current regime, that would not be until 2022. Given that food prices do go up 1%-2% a year, most years, that number is not unmanageable for most households,” Charlebois wrote in Retail Insider.  […]

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More From Retail Insider

Modern Golf Opening Innovative Golf Social Experience in Downtown Toronto’s First Canadian Place [Interview]

The 8,500-square-foot Financial District space will feature multiple bays, bars, lounge areas, and partnerships with Food Dudes for food and beverage offerings, marking a significant shift in the company's growth strategy.

Wendy’s Bold Dynamic Pricing Move Has its Positives and Negatives [Op-Ed]

Sylvain Charlebois discusses the unusual move by Wendy's in the US to implement dynamic pricing, and how it could benefit the business while potentially turning off consumers.

Krispy Kreme Doughnuts Gears Up for Nationwide Expansion in Canada with Innovative Store Formats [Interview]

New locations in new markets are planned, including a mix of Doughnut Café concepts and manufacturing locations for the public called 'Theatre Hubs'.

Robson Street in Vancouver in Flux as New Retailers Prepare to Open Stores [Feature]

The street is seeing new retailers prepare to open, including a prominent corner that is about to see some very big changes and a potential luxury mall nearby cancelled.

Growing Crisis in Retail Inventory in Canada as Factory Direct Liquidates Stores [Interview]

The founder of A.D. Hennick & Associates says he's seeing overwhelming demand to liquidate inventory, indicating a concerning trend in the industry as more retailers look to insolvency.

Here’s What We Can Learn from Canada’s Response to Inflation in the 1980s and 1990s [Op-Ed]

Younger, poorer households have disproportionately suffered because their price index is skewed more toward food and shelter, say the authors.

Food Preferences in Canada Changing as Millennial and Gen Z Demographics Shift [Op-Ed]

Sylvain Charlebois discusses Canada's aging population and how younger consumers are shifting the grocery food landscape.

Henry Singer Unveils Downtown Edmonton Flagship Store at the ICE District, Featuring a Bar, Barber and Shoe Shine [Photos/Interview]

Jordan Singer discusses how the upscale menswear retailer recently relocated its Edmonton flagship store from Manulife Place into a 10,000 square foot space at the base of Western Canada's tallest building.

Canadian Retail Sales Dip: Year-End Drop in Discretionary Spending [J.C. Williams Group Analysis]

2023 Canadian retail sales ended in a lacklustre way, with controlled consumer spending amid a tumultuous year.

Landlord QuadReal Launches Pickleball Courts in Commercial Properties to Create Consumer Experience [Interview/Photos]

The initiative helps revitalize and re-imagine spaces using sustainable development practices, while incorporating the latest technology to enhance the visitor experience, blending physical and digital elements.

Canadian Consumers Willing to Switch Grocery Stores while Seeking Bargains: Study [Op-Ed]

Sylvain Charlebois says that a new survey offers a rigorous look into the preferences and behaviours shaping the future of grocery shopping in Canada.

Iconic Flo’s Diner in Toronto’s Yorkville Forced to Close After 33 Years Amid Landlord Dispute 

Retail Insider interviewed Flo’s co-owner who discusses the “heart wrenching” situation where he is being forced to close his business that began on Bellair Street in 1991.

Anatomy of a Leader: Teresa Spinelli, Owner of Alberta-Based Italian Centre Shop Ltd.

Spinelli discusses her leadership of the popular retailer which has expanded over the years, describing how she struggled to run the company at first and grew to love it.

Upscale Canadian Fashion Brand SMYTHE Expands with New Standalone Calgary Store [Interview/Photos]

It's the second store location for the Toronto-based brand, which is seeing success with its exclusive womenswear collections.

Toronto’s CF Sherway Gardens Hits Sales Milestone with Exciting Retail Growth and Future Plans [Interview]

The shopping centre is adding new retailers as sales per square foot hit an all-time high, with plans to re-tenant Nordstorm as foot traffic grows following Eataly's opening in the mall a few months ago.

ECS Coffee Opens Canada’s Largest Coffee and Espresso Equipment Gear Showroom and Retail Space in Toronto [Interview]

The new Etobicoke location is unique to Canada if not North America, according to its founder, with coffee roasting, equipment showroom, over 500 varieties of coffee, Youtube studio and various in-store experiences. He has plans to expand the concept nationally.

New Loblaws City Market Opens in Vancouver’s ‘The Post’ Building, Adding Grocery Competition to the Downtown Core [Podcast]

Craig and Lee discuss the opening of a new Loblaws City Market in downtown Vancouver's renovated Post building, and they explore its potential impact on local grocery shopping.

Loblaw Announces $2 Billion Investment in Canada for 2024 with Dozens of New Stores and 7,500 New Jobs [Expert Comment]

The retail behemoth will be growing substantially this year, following backlash over profits as inflation continues to impact Canadians.

Dubai-Based Asian Street Food Concept ‘Wok Boyz’ Expands into Canada with Plans for Multiple Locations [Interview]

The company's founder says the popular concept, with personalized meals, has an opportunity to grow substantially with its high-quality ingredients and theatrical flare, complete with fiery customer-facing woks.

Calgary Surge Basketball Team Launches Innovative Pop-Up at CF Chinook Centre to Boost Community Engagement [Interview]

The retail activation, which opened this month, is resulting in heavier foot traffic in a quieter part of the mall.

RECENT RETAIL INSIDER VIDEOS

Advertisment

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Modern Golf Opening Innovative Golf Social Experience in Downtown Toronto’s First Canadian Place [Interview]

The 8,500-square-foot Financial District space will feature multiple bays, bars, lounge areas, and partnerships with Food Dudes for food and beverage offerings, marking a significant shift in the company's growth strategy.

Wendy’s Bold Dynamic Pricing Move Has its Positives and Negatives [Op-Ed]

Sylvain Charlebois discusses the unusual move by Wendy's in the US to implement dynamic pricing, and how it could benefit the business while potentially turning off consumers.

Krispy Kreme Doughnuts Gears Up for Nationwide Expansion in Canada with Innovative Store Formats [Interview]

New locations in new markets are planned, including a mix of Doughnut Café concepts and manufacturing locations for the public called 'Theatre Hubs'.

Robson Street in Vancouver in Flux as New Retailers Prepare to Open Stores [Feature]

The street is seeing new retailers prepare to open, including a prominent corner that is about to see some very big changes and a potential luxury mall nearby cancelled.

Growing Crisis in Retail Inventory in Canada as Factory Direct Liquidates Stores [Interview]

The founder of A.D. Hennick & Associates says he's seeing overwhelming demand to liquidate inventory, indicating a concerning trend in the industry as more retailers look to insolvency.

Here’s What We Can Learn from Canada’s Response to Inflation in the 1980s and 1990s [Op-Ed]

Younger, poorer households have disproportionately suffered because their price index is skewed more toward food and shelter, say the authors.

Food Preferences in Canada Changing as Millennial and Gen Z Demographics Shift [Op-Ed]

Sylvain Charlebois discusses Canada's aging population and how younger consumers are shifting the grocery food landscape.

Henry Singer Unveils Downtown Edmonton Flagship Store at the ICE District, Featuring a Bar, Barber and Shoe Shine [Photos/Interview]

Jordan Singer discusses how the upscale menswear retailer recently relocated its Edmonton flagship store from Manulife Place into a 10,000 square foot space at the base of Western Canada's tallest building.

Canadian Retail Sales Dip: Year-End Drop in Discretionary Spending [J.C. Williams Group Analysis]

2023 Canadian retail sales ended in a lacklustre way, with controlled consumer spending amid a tumultuous year.

Landlord QuadReal Launches Pickleball Courts in Commercial Properties to Create Consumer Experience [Interview/Photos]

The initiative helps revitalize and re-imagine spaces using sustainable development practices, while incorporating the latest technology to enhance the visitor experience, blending physical and digital elements.

Canadian Consumers Willing to Switch Grocery Stores while Seeking Bargains: Study [Op-Ed]

Sylvain Charlebois says that a new survey offers a rigorous look into the preferences and behaviours shaping the future of grocery shopping in Canada.

Iconic Flo’s Diner in Toronto’s Yorkville Forced to Close After 33 Years Amid Landlord Dispute 

Retail Insider interviewed Flo’s co-owner who discusses the “heart wrenching” situation where he is being forced to close his business that began on Bellair Street in 1991.

Anatomy of a Leader: Teresa Spinelli, Owner of Alberta-Based Italian Centre Shop Ltd.

Spinelli discusses her leadership of the popular retailer which has expanded over the years, describing how she struggled to run the company at first and grew to love it.

Upscale Canadian Fashion Brand SMYTHE Expands with New Standalone Calgary Store [Interview/Photos]

It's the second store location for the Toronto-based brand, which is seeing success with its exclusive womenswear collections.

Toronto’s CF Sherway Gardens Hits Sales Milestone with Exciting Retail Growth and Future Plans [Interview]

The shopping centre is adding new retailers as sales per square foot hit an all-time high, with plans to re-tenant Nordstorm as foot traffic grows following Eataly's opening in the mall a few months ago.

ECS Coffee Opens Canada’s Largest Coffee and Espresso Equipment Gear Showroom and Retail Space in Toronto [Interview]

The new Etobicoke location is unique to Canada if not North America, according to its founder, with coffee roasting, equipment showroom, over 500 varieties of coffee, Youtube studio and various in-store experiences. He has plans to expand the concept nationally.

New Loblaws City Market Opens in Vancouver’s ‘The Post’ Building, Adding Grocery Competition to the Downtown Core [Podcast]

Craig and Lee discuss the opening of a new Loblaws City Market in downtown Vancouver's renovated Post building, and they explore its potential impact on local grocery shopping.

Loblaw Announces $2 Billion Investment in Canada for 2024 with Dozens of New Stores and 7,500 New Jobs [Expert Comment]

The retail behemoth will be growing substantially this year, following backlash over profits as inflation continues to impact Canadians.

Dubai-Based Asian Street Food Concept ‘Wok Boyz’ Expands into Canada with Plans for Multiple Locations [Interview]

The company's founder says the popular concept, with personalized meals, has an opportunity to grow substantially with its high-quality ingredients and theatrical flare, complete with fiery customer-facing woks.

Calgary Surge Basketball Team Launches Innovative Pop-Up at CF Chinook Centre to Boost Community Engagement [Interview]

The retail activation, which opened this month, is resulting in heavier foot traffic in a quieter part of the mall.