Environment Minister Catherine McKenna in Ottawa on Aug. 9, 2019.Sean Kilpatrick/The Canadian Press
Environment Minister Catherine McKenna has backed off a pledge to freeze the carbon tax at $50 a tonne after 2022, saying a re-elected Liberal government would review the levy with provinces before deciding how to proceed.
In June, Ms. McKenna said the Liberals planned not to increase the tax once it hit $50, which equates to roughly 11 cents a litre of gasoline. The minister was responding to a Parliamentary Budget Office report that concluded Ottawa would have to increase the levy to $102 a tonne if it relied on the federal tax alone − rather than the current mix of policies − to meet its international target for reduction of greenhouse gas emissions.
In an interview with The Globe and Mail, she said the government had no plan to increase the tax, but would make a decision on future levels toward the end of the next mandate after consultations with provinces, territories, businesses and Canadians more broadly.
The carbon tax will be a key issue in the Oct. 21 election. The federal Conservative Party opposes the levy and a number of conservative provincial governments are fighting the tax in court.
However, in a 2016 agreement, the federal, provincial and territorial governments, except for Saskatchewan, signed on to Ottawa’s plan to put a levy on carbon emissions. But the deal indicated the approach would be reviewed “by 2022 to confirm the path forward.”
“In our climate plan, we committed to 2022 with provinces and territories. So there are no plans to increase it – that was our plan to 2022,” Ms. McKenna said in a telephone interview last week.
Conservative politicians at both the federal and provincial levels have denounced the carbon levy as an undue burden on households, even though Ottawa is returning all the revenue it raises in a province or territory to that jurisdiction. Some 90 per cent of the proceeds are going to households in the form of rebates delivered through the income-tax system that, for the average consumer, covers the full cost of the tax.
Conservative MP Pierre Poilievre condemned Ms. McKenna’s “double flip-flop” on the carbon tax, and said his party is eager to make the levy an issue in the coming election. “It is evidence that the Liberal government has a hidden agenda − they will raises taxes far higher than they have admitted to date,” Mr. Poilievre said Sunday as he took a break from door-knocking in his Ottawa-area riding.
In a statement Sunday, Ms. McKenna’s press secretary, Sabrina Kim, said, “We are the only party with a clear and transparent plan on pollution pricing that takes us through the next four years.”
While the minister said the carbon levy remains a critical part of Canada’s effort to reduce GHG emissions, she added that it is just one of some 50 measures the government has taken, including $60-billion in spending over a decade on public transit, energy efficiency and low-carbon technology; regulations to reduce the carbon content in fuels, to require better gas mileage for cars and trucks, and efforts to support the adoption of electric vehicles.
The federal carbon tax applies in Saskatchewan, Manitoba, Ontario and New Brunswick − four provinces that do not have their own carbon prices or do not meet the federal standards for one. The Liberals also vow to impose it in Alberta, in light of Premier Jason Kenney’s move to kill the consumer levy imposed by the former New Democratic Party government. Mr. Kenney has kept a tax in place for larger industrial emitters such as oil sands plants and coal-fired generating stations, but is rolling back the rate from $30 a tonne under the NDP plan to $20, and then freezing it there.
The federal government released regulations last week that would see the tax start up in Alberta on Jan. 1, 2020. Consumers there would face the full federal levy, and would receive a rebate with their tax return next year. Large industrial emitters would face a joint federal-provincial system paying the provincial levy of $20 a tonne, but remitting to Ottawa the difference between the provincial rate and the federal one, which will be $30 in January, rising to $40 in 2021 and $50 in 2022.
Mr. Poilievre said he fully expects that, if they win government in the October vote, the Liberals would increase the planned rate for the carbon tax for the post-2022 period.
The Conservatives have vowed to scrap the tax if they win the Oct. 21 vote. Conservative Leader Andrew Scheer released a platform that relies heavily on incentives to consumers and business to save energy and adopt low-carbon technology. Simon Fraser University economist Mark Jaccard wrote last week in the journal Policy Options that the Conservative plan would lead to an increase in GHG emissions between 2020 and 2030.
Alberta Environment Minister Jason Nixon accused the Liberals of having a “hidden plan.”
“It’s clear that the Trudeau Liberals can’t be trusted to not hike their carbon tax further if elected to a second term,” he said in an e-mailed statement.