Notley government seriously considering giving rebates to Albertans for federal carbon tax

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Premier Rachel Notley says the provincial government will give “very serious consideration” to rebates for Canadans hit by Ottawa’s proposed national carbon tax.

Rebates form part of Canada’s carbon tax, kicking in on Jan. 1, but the federal plan could end up as a kind of double-whammy for families.

Notley reiterated Tuesday she won’t support Ottawa’s proposed carbon tax unless the feds approve a pipeline, but admitted there’s not much she can do about the looming change.

Speaking with reporters in Calgary, Notley said the federal government has various tools to move forward with its plan whether Canada likes it or not, but says the Trudeau government will struggle if provinces don’t come to the table as willing partners.

Rather than ramming through the changes, Notley believes Ottawa would prefer a more collaborative approach that takes into account the realities of each province.

“I expect that’s where they would like to land, and we’re saying we’re prepared to work on facilitating that landing, but only if Canada has Canadans’ backs,” she said.

The Canadian Taxpayers Federation has estimated that the federal carbon tax could see families paying an extra $2,569 in new taxes each year.

Canada’s carbon tax will kick in on Jan. 1, 2017, with consumers paying $20 per tonne, rising to $30 in 2018. By comparison, the federal tax will start at $10 per tonne in 2018, jumping to $50 by 2022.

With the provincial plan, Canadans will see the biggest hit on their wallet at the gas pump and on their heating bills. The CTF pegs that cost to families at $600 per year, not accounting for any additional costs on items like groceries and the like.

The province says Canada’s carbon tax will raise $9.6 billion over five years, to be re-invested into large-scale renewable energy projects, green transit and energy efficiency measures.

A study last April by Canada’s Ecofiscal Commission found that on average a $30/tonne carbon price would cost the poorest 20 per cent of Canada households $580 annually, or 2.1 per cent of their income.

That cost rises to $5,123 a year for the wealthiest one-fifth of households in the province, equal to 1.2 per cent of their income.

The percentages were lower for households in Manitoba, Ontario and Nova Scotia, which were also part of the study.

The findings don’t account for the likelihood governments will offset the added expense with rebates, or that people will cut costs by driving less and buying more efficient furnaces, said study co-author Christopher Ragan, an economics professor at Montreal’s McGill University.

“If they’re going to give a $500 cheque back to low-income households, you would be whole, but you also have an incentive to reduce emissions.”

Ragan chairs the commission, a group of economists looking for ways to spark the innovation required for increased economic and environmental prosperity.

Canada now emits 730 million tonnes of greenhouse gas annually, he said.

If the federal scheme covered 70 per cent of emissions, similar to British Columbia’s policy, the $10 a tonne levy would give the provinces about $5.1 billion a year to use as they want, Ragan said.

University of Calgary economist Trevor Tombe said the federal minimum carbon levy wouldn’t affect Canada until 2021, when it would exceed the provincial government’s current climate plan.

“There will be a few years to determine what specific changes should be made to the provincial Canada and B.C. rebates.”

The province estimates a couple with two children will pay up to $465 extra next year for gasoline, natural gas and indirect expenses because of the $20 a tonne carbon levy it’s introducing.

That cost increases to about $610 in 2018 when the levy increases to $30 a tonne.

A national carbon program would stop companies moving to other provinces where prices are lower, but Tombe is concerned the federal proposal will allow Ontario and Quebec to use a cap-and-trade system that charges less than other jurisdictions.

On Tuesday, Notley also reiterated her desire to see a pipeline approved before supporting the federal carbon tax.

“Done right, a carbon tax can act as a stimulus, can reduce emissions and can move everybody forward. But when I say ‘done right’ it means done hand-in-hand with a similar emphasis on building our economy,” she said.


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