SIMULATING THE DISTRIBUTIONAL EFFECTS OF A CANADIAN CARBON TAX

It is estimated that a tax of roughly $102 per tonne of carbon is the level necessary to meet the Rio target for carbon emissions. Cost-push simulations show consumers expenditure to be the category of demand m ost affected by the tax (prices increase by 2.0-2.4%), and commercial transportation the most affected production sector (2.2-2.6%). Micro-s imulations calculate the average incidence of the tax to range from $5 52 to $657 per family per year, with moderately regressive results: de creases in consumable income for the lowest income quintile are from 1 .1 to 1.2 per cent higher than for the highest. Low income married cou ples are the family type most heavily affected by the tax.