Carbon tax pitched for NB

Mar 15, 2015

Carbon tax pitched for NB

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Green Party Leader David Coon is proposing the province to implement a carbon tax on large polluters in New Brunswick: Irving Oil, Enbridge Gas, NB Power, and Corridor Resources Inc.

“The main role of such a charge in place is to mainly generate revenue and then invest it to reduce carbon emissions,” he said.

Coon’s proposal calls for a $10 levy per tonne of carbon burned, a conservative tax rate compared to British Columbia’s $30 per tonne carbon price which is imposed broadly on the end user. The Green Party’s aim would be to use revenue generated from the tax to fund public transportation and pay down the deficit.

“To provide people a real alternative to driving,” said Coon.

Though the government insists they are open to the idea of a carbon tax, Coon is concerned with the reception he has received thus far.

“No one really wants to talk about it despite the fact that it has become a real topic of discussion across the other provinces.”

British Columbia implemented a revenue-neutral carbon tax in 2008, meaning the tax is used to offset decreases in other taxes such as the income tax and the corporate tax rate.

“There no sense of where the premier stands on putting a price on carbon and so it’s hard to even get into a discussion,” said Coon.

Werner Antweiler, chair in international trade at the University of British Columbia’s Sauder School of Business, said a small province like New Brunswick may be better off with a consumer tax, rather than one imposed on the producers.

“The problem with small jurisdictions is that you impose the tax burden on only a few players.”

Antweiler said it applies to companies like Irving Oil, who refine oil in New Brunswick but sell it to many jurisdictions. The company would be selling oil to provinces that may not impose a price on carbon, yet still be taxed regardless.

“If you are exporting goods into a foreign jurisdiction, where do you actually pay the carbon tax? Do you attribute it to where the end user actually is, or do you attribute it to the emissions from consumptions in other jurisdictions, or do you pay for it locally?”

“It is a structural problem,” he said.

For Antweiler, carbon taxes work best when all provinces have some form of a price on carbon. It can’t simply be individual provinces.

“If other provinces aren’t doing the same, it creates a competitive issues where one company is paying a carbon tax and the other competitor is not. It distorts the market.”

The only provinces with a price on carbon are British Columbia, Quebec, and Alberta.

However, Clare Demerse, senior policy analyst with Clean Energy Canada, insists the benefits spread much further. In British Columbia, where the tax is imposed on the consumer, the carbon tax has allowed for low-income tax credits. She said the tax was designed to be equitable.

“If you’re someone who is living right on the line and the cost of heating, for example, was to go up, that is not a cost you should be paying out of pocket for.”

Gas prices went up seven cents per litre in B.C. after the tax was implemented.

The federal Conservatives have continuously argued that a carbon tax is a job-killing tax. Last December, Prime Minister Stephen Harper told the House of Commons, “it would be crazy, it would be crazy economic policy.”

The federal government has refused to come up with a comprehensive greenhouse-gas (GHG) reduction strategy for nearly a decade.

Demerse, who worked on federal climate policy with the think-tank, the Pembina Institute, said taxation policy must also be about hindering harmful things in society the way taxation and regulation gradually cut down on the sale of cigarettes.

“The basic economic theory is that it is really good to move taxes away from thing that we want to encourage in our society like jobs or income and move them over to things that we want to discourage in our society like pollution,” she said.

While Demerse acknowledged the hesitation of imposing such a tax on economies dependent on fossil fuel industries, she emphasized the irrelevance of the dominance of any sectors over an economy.

“Alberta, albeit, it is a low carbon price, but Alberta has had a carbon price in place since 2007. And they’re obviously an economy that is extremely dependent on the oil and gas sector. Norway also a very significant oil producer has had a carbon price for decades.”

A carbon tax for New Brunswick could generate over an estimated $140 million annually in revenue.

“Just because the jurisdiction has a certain economic situation, that is no reason not to have a carbon price, it is a reason to think carefully about how you design it,” said Demerse.