Ottawa accepts New Brunswick’s carbon-tax proposal

OTTAWA – New Brunswick consumers will get a break at the gas pumps come April, after the federal government approved the province’s carbon-tax proposal Wednesday.

It is the second time this week Ottawa has found a way to co-operate with a provincial government over pricing greenhouse-gas emissions.

On Monday, as Alberta Premier Jason Kenney landed in Ottawa for a two-day visit, the federal government approved Alberta’s carbon-pricing system for big industrial emitters. On Wednesday, federal Environment Minister Jonathan Wilkinson said New Brunswick’s proposed carbon tax policy meets Ottawa’s requirements for the consumer fuel levy.

So Wilkinson said Ottawa will “stand down” on April 1 and remove the federal carbon price from consumer purchases of fuels like gasoline, natural gas and propane in New Brunswick. At the same time New Brunswick will apply its own levy on those fuels, of $30 per tonne of carbon dioxide emitted from burning them.

However New Brunswick is also going to be cutting its provincial gas tax to offset the carbon levy, something New Brunswick Environment Minister Jeff Carr said in November will result in lower prices at the pump than if the federal system remained in place.

“We took a position after the federal election that rather than allowing New Brunswickers to continue to pay the high price at the pump for the federal backstop, we would negotiate our own deal that works best for New Brunswick consumers, while at the same time will protect our own environment here in New Brunswick,” Carr said Wednesday.

As part of a national plan to curb greenhouse-gas emissions, the federal Liberals require every province to have a minimum price on carbon – $20 a tonne now, rising to $50 by 2022 – or have a federal levy imposed instead. The cost of a litre of gas goes up about 2.3 cents for every $10 of carbon taxing applied, and New Brunswick will lower its provincial gas tax by about the same amount the carbon tax will add.

New Brunswick Premier Blaine Higgs was among the conservative premiers challenging the federal carbon tax in court, but changed his mind after nearly two-thirds of New Brunswick voters picked a party supportive of a carbon tax in October’s federal election.

In late November, the province gave Ottawa a carbon-pricing proposal based on systems the federal government previously approved in Prince Edward Island and Newfoundland and Labrador. Like New Brunswick, those provinces cut their gas taxes to offset the consumer price increase associated with the carbon tax.

Wilkinson said in a written statement issued Wednesday that New Brunswick’s decision shows “growing momentum for pricing pollution in Canada because it’s a cost-effective way to cut pollution and deliver clean growth.”

The federal carbon tax comes with consumer rebates that Ottawa says – and the parliamentary budget office has confirmed – are worth more to most Canadian families than they will pay due to the carbon tax. In New Brunswick, those payments, delivered via tax returns, averaged $248 per household this year.

By cutting the gas tax New Brunswick is offering the savings in a different way.

Isabelle Turcotte, director of federal policy with the Pembina Institute, said she is not a fan of how the three Atlantic provinces are going about pricing pollution.

She said with the tax-rebate system, consumers don’t end up being poorer, but the price of gasoline goes up as a very visible incentive to curb fossil-fuel use in a bid to save money. She said offering the rebate via a cut to gas taxes makes the carbon price impact less visible and therefore less likely to compel consumers to use less fuel.

She said she understands why Ottawa approved New Brunswick’s plan, since the federal government had already approved it in two other provinces. But Pembina objected to those systems too.

“Tackling climate change should not be a race to the bottom,” she said.

– With files from Kevin Bissett in Fredericton

Mia Rabson, The Canadian Press