CLEAN ECONOMY WORKING PAPER SERIES - CARBON PRICING COSTS FOR HOUSEHOLDS

We quantify the direct and indirect costs of carbon pricing for households in each province and across the income distribution, and identify the net cost to households under four potential revenue-recycling approaches. [...] The amount of indirect carbon pricing costs paid by households is impacted by the level of household expenditure, the mix of goods and services purchased by households, the GHG emissions intensity of the products that are purchased, and the presence of policies like the OBPS that reduce the carbon pricing costs borne by industry. [...] The sum of the West and Williams indices for the carbon tax and the corresponding revenue recycling scenario indicates the progressivity of the overall tax change. [...] 4.3 The Effect of the OBPS on Household Carbon Costs Figure 7 presents the distribution of carbon tax costs by province, with and without the OBPS. [...] Similarly, we follow the CAI in making dividend payments for the spouse or single parents’ first child under 18 half of the value of the dividend for the first adult in a household, and the dividend for each child in the household is one- quarter of the first adult value.