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CANADA | Carbon plan

Trudeau promises rebates in new carbon tax plan


CBC News

Tuesday, October 23, 2018, 5:52 PM - The federal Liberal government will slap a carbon tax on fuels in provinces and territories with no adequate emissions pricing plans of their own — but will send annual rebates to Canadian families to offset most of the added costs of this climate-change fighting initiative.

Extreme weather events like floods, wildfires, storms and droughts offer proof that Canada is already grappling with the effects of climate change — and these increasingly frequent events demand action from Ottawa in the form of a national price on carbon, Prime Minister Justin Trudeau said Tuesday in Toronto.

Trudeau said he believes the added cost on fuels will tamp down carbon-intensive consumption, reduce emissions and help curb pollution.

"The science is unequivocal: putting a price on pollution is one of the best ways to move forward," he said to reporters and Humber College students in the Etobicoke riding of Ontario Premier Doug Ford, a vocal carbon tax foe.

"The problem exists because your political leaders have done far too little about this. Will we kick this can down the road yet again? Or will we show some courage to do what needs to be done?" Trudeau said.

"Starting next year, it will no longer be free to pollute anywhere in Canada. And we're also going to help Canadians adjust to this new reality ... Every nickel will be invested in Canadians in the province or territory where it was raised."

CLIMATE PLAN DIFFERS ACROSS CANADA

There are two parts to the federal "backstop" climate program, which will apply in different ways across the country.

The first part is what the government is calling "a regulatory charge on fuel," which will be levied on gasoline, light fuel oil, natural gas and propane.

Under the terms of the national climate framework — a deal agreed to by most of the provinces and the federal government roughly two years ago — Ottawa will levy a tax of $20 on every tonne of greenhouse gas emissions starting in 2019, rising by $10 each year to $50 a tonne by 2022.

VIDEO: CO2 EMISSIONS, VISUALIZED



According to background documents supplied by the government, the $20-per-tonne carbon tax will result in an approximate cost increase of 4.42 cents a litre for gasoline, 3.91 cents per cubic metre for natural gas and 3.10 cents a litre for propane.

Consumers will not pay the tax directly to the federal government; rather, Ottawa will impose the tax on fuel and production and distribution companies — natural gas providers like Enbridge, for example — which will in turn pass on those costs to customers.

This federal 'backstop' will apply in provinces that do not have adequate climate pricing plans of their own that meet federal standards — that's Saskatchewan, Manitoba, Ontario and New Brunswick starting in April 2019, but also Yukon and Nunavut as of July 2019.

The other provinces — Quebec, Alberta, B.C., Nova Scotia, P.E.I. and Newfoundland and Labrador — will meet the federal benchmark of having a price on carbon of at least $20 a tonne as of Jan. 1, 2019. The federal backstop will not apply in those jurisdictions.




So what initially was meant to be a backup plan in the event that a few provinces failed to design their own carbon pricing plans has now become the principal carbon pricing mechanism for nearly half of the country's population. Roughly 47 per cent of Canadians live in provinces or territories that have said they will not follow through on the national climate framework.

'ACTION' INCENTIVES PROMISED

In an effort to make most Canadian families in those provinces whole, and to offset the resulting costs of these new taxes, the Liberal government will offer direct rebates to taxpayers — called Climate Action Incentive payments.

While Trudeau insisted that the carbon tax and the payment program will be revenue-neutral for the federal government, a government official at a technical briefing for journalists acknowledged that some Canadians — about 30 per cent of them — will pay more a year in carbon taxes than they stand to gain from the new backstop program. The official said these people are more likely to be wealthier Canadians who have to heat bigger homes or fuel larger vehicles.

On the other hand, a sizeable majority of Canadians receiving the federal payments — the other 70 per cent in those provinces without carbon pricing plans of their own — will receive more in climate payments than they'll pay each year through the new carbon tax.

For efficiency, people in affected provinces will indicate on their tax returns if they are eligible for the payment.

The Canada Revenue Agency (CRA) will then ensure people are adequately compensated. So the payments will be made annually and will reflect about a year's worth of emissions.

If someone is entitled to a tax refund, that refund would be boosted by the amount a taxpayer is entitled to under the new climate incentive payment program. If you owe the federal government money at tax time, that amount would be reduced by the amount you stand to gain from this initiative.

The payment is not intended to be part of the federal tax system as such; the government said CRA's existing infrastructure is best placed to make payments like these to taxpayers.

Here's what the average household in these provinces will receive from the federal government:

  • Ontario: about $300 a year.
  • New Brunswick: $248.
  • Manitoba: $336.
  • Saskatchewan: $598.

The amount will vary based on the province and the number of people in a household.


The Liberals say average households will come out ahead in its plan to levy a carbon tax and provide direct rebates to consumers in six provinces and territories that don't have a carbon-pricing plan. Conservatives say it will make everything more expensive, while the NDP and Greens say it won't get Canada to its emissions targets. (CBC News)

For example, a single adult in Ontario would see about $154 next year from the payment.

These payments will rise in lockstep with the annual hike in the carbon tax. Even after accounting for the fuel cost hike, most families will come out marginally ahead, officials said.

Payments for people in small communities and rural areas will also include a 10 per cent supplement, government officials said, "in recognition of their specific needs."

Conservative Leader Andrew Scheer dismissed the Liberals' plan as an election campaign tactic, while questioning the government's contention that the new program won't result in a sizeable hit to wallets.

"Today, Justin Trudeau unveiled his election gimmick to try and trick Canadians into paying higher taxes on the basic necessities," he said, calling the levy a "tax plan dressed up as an emissions plan."

"Canadians are now supposed to take his word that a measly $12.50 a month will cover the true cost of his carbon tax ... it will make everything more expensive for the people who can afford it the least," he said, adding many Canadians simply don't have the means to replace a less efficient furnace or buy an electric vehicle.

(The $12.50 figure Scheer cited is the approximate amount a single Ontarian would receive, each month, to help offset the carbon tax on fuels.)

The second part of the system is a separate fuel charge for large industry, called the 'output-based pricing system'. Officials said details of this policy will be provided at a later date; Ottawa hasn't finished designing this program yet. When it takes effect, it will be retroactive to Jan. 1, 2019.

While P.E.I. will have its own provincial price on fuels, it will look to Ottawa to apply this charge on larger emitters when the program is up and running.

The proceeds from this large industry tax won't be returned to Canadians through payments, but will be used to support future climate actions in the jurisdiction in which the revenue is raised.

VIDEO: THE GAS PROBLEM


TAX TO HELP MEET PARIS CLIMATE TARGETS 

Canada signed on to ambitious emissions reduction targets at the Paris climate accord meeting in 2015, and a national pricing strategy is seen by Ottawa as the best way to live up to the accord.

(The Liberal government maintained the same targets set by the former Conservative government: 17 per cent below 2005 levels by 2020 and 30 per cent below by 2030.)

The government projects the pricing plan will reduce carbon pollution by 50 million to 60 million tonnes by 2022.

However, the government has conceded a carbon price alone won't be enough to meet those targets.

The national climate plan also includes other measures to battle climate change, including new building codes to boost energy efficiency, more charging stations for electric cars, expanding clean electricity sources and upgrading power grids.

This story was written for the CBC by John Paul Tasker.

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