There is More to the Federal Carbon Tax than Meets the Eye
Posted September 9, 2022
Reducing our carbon emissions is a worthwhile goal, and a carbon tax is recognized as a way of achieving it, but it is not the only way.
Steven Guilbeault, Federal Minister of Environment and Climate Change, has made it clear. What matters on the carbon emissions reduction file is not reaching the goal but rather following the federally prescribed means for doing so.
Never mind that Nova Scotia has a credible plan that will lead the other provinces in emissions reduction and retire our entire fleet of coal-burning plants by 2030.
Premier Houston wrote to Ottawa explaining the program. Guilbeault’s negative reply was composed before Houston’s letter was received.
Liberal MP Andy Filmore tells us that the federal act clearly requires a price on pollution. He points out that there are rebates for people who will pay the tax on their gasoline and home heating fuel. He cites $1079 cheques that Albertan families of four will receive. That is at the very top end. A single earner in Ontario will receive $373.
Filmore claims that eight out of ten taxpayers will get back more in the rebate than they paid at the pump and for their heating fuel.
The problem is that the taxes will also hit people by indirect means. They apply to the carbon fuels used by municipal buildings and vehicles. That extra cost will show up in property taxes.
The same is true of universities, which will have to raise their tuitions to pay for the taxes. Schools, hospitals, and other provincial buildings and vehicles will pay the carbon tax, meaning that provincial sales and income taxes must be higher.
Long-haul truck drivers will pay a lot of carbon tax, which will be passed on by retailers to customers in the prices of food, clothing, and appliances.
The current rates for electricity were based on fuel cost estimates much lower than what NSP is paying in the market today. A resulting deficit estimated at $260 million will have to be collected when future rates are set. The federal tax that Nova Scotia Power will pay on the coal, oil, natural gas, and gasoline it uses to deliver electricity will further raise electricity rates.
The tax on gasoline is currently 11.1 cents per litre and will rise annually, reaching 37.3 cents per litre in 2030.
The combined revenue from the visible taxes plus these hidden additions are reduced by 10% to fund government handout programs such as the absurdly inefficient solar gardens project in Mahone Bay. The rest is used to fund the rebates.
If people are keeping track of their purchases of heating fuel and gasoline, this will still look like a good deal for most people. It will be impossible for them to know how much of the rebate they are funding indirectly.
This is clever politicking by the federal Liberals. People’s grumbling about the rising tax on a tank of gas or load of fuel oil will be mitigated by the rising size of the rebate cheque they receive quarterly.
Meanwhile they will be angry with the provincial government for the relentless increases (in addition to inflation) in the cost of living: food, tuitions, electricity, property taxes, and provincial taxes.
Premier Houston has been highly visible but unsuccessful in opposing the Liberal plan. He is now saying that the federal government can collect the tax, but he wants to decide how it is spent.
There is a provision under which the Government of Canada, if a province or territory requests it, can return the revenue collected from this tax to the jurisdiction.
He should take it. At least then the carbon taxes on provincial assets such as hospitals, schools, and provincially-owned buildings and vehicles will go back into the province’s treasury. Other ways can be found to mitigate the impact on electricity customers, municipalities, and universities.
Of course, the size of any such mitigations must not simply undo the tax on the individual recipient. Rather, they should be based on the operational needs of the different sectors.
Nova Scotians will find that they are getting smaller rebates than taxpayers in other provinces. When they do, they should remember that a lot of hidden costs will have been avoided by the Premier’s choice.