How do your federal carbon tax costs compare to your rebates? This tool helps you calculate that

Carbon taxes have existed in Canada for more than a decade, but they remain a complex and often confusing topic.

Alberta and Quebec adopted limited forms of carbon pricing in 2007, and British Columbia was the first province to introduce a broad-based carbon tax in 2008.

Over the following decade, various provinces followed suit with their own carbon pricing systems, with varying degrees of stringency and applicability.

Some provinces, such as Alberta and Ontario, introduced carbon pricing systems under one government that were later repealed by another government. In Manitoba, plans for a carbon tax were announced in 2017 but then abruptly cancelled by the same government in 2018.

In 2019, the federal carbon tax came into effect. It applies in provinces and territories that don't have carbon pricing systems that Ottawa considers sufficient in the national effort to reduce greenhouse gas emissions.

The federal policy — which includes both a tax on fossil fuels and rebates paid directly to households — has been the subject of much political debate over the past four years.

It has also been the source of much confusion, which is understandable because the policy is not exactly simple.

The amount you pay in carbon tax varies from fuel to fuel. More emissions-intensive fuels are subject to higher tax rates.

The amount you receive in rebates, meanwhile, depends on three criteria:

Your rebate is unaffected by how much fuel you actually consume.

This is what creates the financial incentive to reduce your carbon emissions: your rebate is a fixed amount, but you have some control over how much fuel you use. The less fuel you consume, the less tax you pay.

If your fuel usage is below a certain level, your rebate will exceed what you pay in tax. The federal government says 80 per cent of households get more money back in rebates than they pay in carbon taxes, directly.

Of course, that's not the whole story. There are also indirect costs to consider. These are the carbon taxes paid by companies and passed along to you in the form of increased prices on the goods and services you buy.

Indirect costs are harder to calculate precisely, but there are estimates from the Parliamentary Budget Office and the Smart Prosperity Institute, a policy think-tank based out of the University of Ottawa, that give us a rough idea. These estimates vary depending on how much you spend and which province you live in.