Canada's federal deficit widens to $19.4bn after carbon tax removal cuts revenue

Canada's general government deficit widened to $16.4 billion in Q1 2026, up $1.5 billion from a year earlier, as the removal of the consumer carbon tax hit federal revenue hard. The federal deficit alone reached $19.4 billion, driven by a $3.8 billion drop in taxes on goods and services after the carbon tax was abolished on April 1, 2025. This more than offset gains from income and profit taxes. Provincial and territorial governments saw their combined deficit narrow to $18.2 billion, partly because one-time payments in Ontario from the prior year did not repeat. Federal net debt rose to $1,018.2 billion, up 3.1% year over year. The article provides concrete data on how carbon pricing removal affects government finances, relevant for anyone tracking climate policy impacts on fiscal outcomes.