CALGARY—As he sat, slightly hunched over, having just finished a meal at Calgary’s iconic Blackfoot Truckstop Diner, Darcy Reed seemed resigned to what lies ahead.
For him — and for Alberta.
Reed believes the federal government is about to impose a tax that could be his undoing.
A trucker for 38 years, Reed says he uses about 1,000 litres of fuel a day, driving oversized loads all around the province. The money left over after his costs become his wages, he said.
Reed’s done the math, and contends the looming federal carbon tax — which took effect in the prairie province Jan. 1 — and its resulting increase at the gas pumps could leave him with no wages at all.
If that’s the case, he says he’ll have few options other than to “sell everything and get a job.”
Reed is one of many who oppose the carbon tax in Alberta and who celebrated when the United Conservative provincial government repealed the previous NDP’s version. The federal tax has been cast as a cash grab in a province that’s already struggling economically.
Alberta will join the list of provinces subject to the federal carbon tax as a result of no longer having one of its own making. In doing so, it makes carbon taxation a coast to coast to coast reality in Canada, touching every province and territory.
Albertans will be hit with a carbon tax rate of $20 per tonne, which translates into just over four cents per litre at the pump. In April that goes up to $30 per tonne, or seven cents per litre.
Canada’s carbon tax effort has made for political warfare, pitting Conservative provincial governments against the federal Liberals’ plans. The fight isn’t over. Alberta, like Ontario, has a pending court action against the federal tax.
But that prospect wasn’t offering much comfort to Reed on Tuesday.
“No,” he said without a pause. “It’s not going to be quick enough. I can’t work for free.”
“It was like: ‘Bonus’”
In Barrie, Ont., single mother Lauren Griffith has a much different take on the carbon tax.
Ontario had a cap-and-trade system under premier Kathleen Wynne, which was repealed in 2018 by Doug Ford’s Conservatives. Since April, the province has been under the federal carbon tax, alongside Saskatchewan, Manitoba and New Brunswick, all of which did not have their own provincial carbon tax program.
Ford’s government has continued its anti-carbon-tax sticker campaign at gas pumps, and is taking its fight against the levy to the Supreme Court of Canada.
Despite having a low income, Griffith said she hasn’t noticed a significant increase in her cost of living under either of the carbon taxes. What she has noticed are the rebates.
“When I got that rebate back, it was like, ‘Bonus,’” she said. “I need that right now … I can go get food.”
On Twitter, Griffith chimed into a recent carbon tax debate: “Was using a foodbank far before the carbon tax came in to effect, but I’ll tell you what’s put food on the table once or twice … the rebate.”
She said she sees the carbon tax as an awareness campaign, the first step in what she hopes will be more measures to mitigate climate change.
Griffith said she hopes people will take the time to research the carbon tax and find out where the money is actually going — and to look at the rest of the country, especially provinces such as British Columbia, where carbon pricing is nothing new.
“Are their houses collapsing? Is anybody else totally devastated?” she said.
“It’s not a big deal.”
The ‘myths’ and the math
Alberta will be the last Canadian province or territory to have carbon pricing — but not without putting up a fight.
As Reed ate his meal, Alberta Justice Minister Doug Schweitzer was in the parking lot of the diner talking to members of the media about the federal carbon tax. He said a majority of Albertans voted against the carbon tax by selecting the United Conservatives in this past spring’s provincial election. In June, the province repealed the carbon tax that had been put in place by the previous NDP government.
This paved the way for the federal backstop, which affects any province without its own carbon pricing plan. In between the end of the provincial tax and the beginning of the federal tax, Alberta has taken its fight against the federal carbon taxation to the Alberta Court of Appeal.
On Tuesday, just over twelve hours before the arrival of the federal tax, Schweitzer warned consumers to gas up before pump prices rose.
“We want to make sure as well that Albertans know that even though our taxes are going up, that we’re going to do everything in our power to make sure that we fight back against this federal overreach and make sure Albertans know that we have their backs.”
Alberta is the last province to have a federal or provincial carbon pricing program.
It was also kind of the first.
Economist Glen Hodgson was part of the Ecofiscal Commission, an independent think tank which put out a report in March 2019 debunking 10 “myths” about carbon pricing. The first such “myth,” according to the report, is the idea that putting a price on pollution is a new idea.
Though Alberta didn’t have a consumer tax until the NDP introduced one in 2017, it first put a price on carbon in 2007 by making heavy emitters that couldn’t reduce emissions by 12 per cent pay $15/tonne.
That was several months before Quebec’s carbon tax came into effect, and a year before B.C. introduced its own.
Hodgson said B.C. is a great case study for Albertans to look at and to perhaps ease their economic worries, since the westernmost province has had carbon taxes at the pump for more than a decade now.
“They have a tax on fuel use, and their economy’s been growing very strongly,” he said. “So it’s clear that there’s no relationship between carbon pricing and economic growth.”
Estimates vary, but University of Calgary economist Trevor Tombe said research shows B.C. emissions are five to 15 per cent lower than they would have been without the province’s carbon tax.
Now, all the provinces and territories are under some kind of carbon pricing program, whether it’s the federal tax or a provincial one.
For example, Nova Scotia has a cap-and-trade program that began on Jan. 1, 2019; Prince Edward Island has a mix of provincial and federal carbon pricing; and all three territories are under the federal program, with a few tweaks in Yukon and the Northwest Territories.
On Jan. 1, 2017, the Alberta NDP government under Rachel Notley enacted its carbon tax, beginning at $20 per tonne of carbon dioxide emissions and rising to $30/tonne in 2018. Revenue from the tax was used to fund infrastructure and climate-related projects, as well as being paid back to some Alberta households in the form of a rebate.
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The tax became a central focus of Jason Kenney’s election campaign, where he vowed to repeal it.
And repeal it he did, though of course that meant the federal carbon tax would kick in instead.
At the Alberta Court of Appeal in mid-December, a lawyer for the Alberta government argued that the federal carbon tax is a constitutional problem, one that invades what should be a provincial responsibility.
Alberta has also said it will join Ontario and Saskatchewan in an appeal to the country’s top court, after both took similar cases to their respective provincial courts of appeal.
Tombe said the fight that’s now playing out isn’t really about the tax. In his view, it’s “pure politics.”
He pointed to the UCP government’s own analysis on the economic effect of the federal carbon tax, which estimated it would shave around .055 per cent off of GDP growth rates in the next decade.
“That’s a reasonable estimate,” said Tombe. “But … that’s almost undetectably small.”
As for the direct consumer impact, a March report by Tombe and University of Calgary environmental policy research Jennifer Winter showed that under the federal program, about eight in 10 Albertans will get rebates back that exceed the cost of the carbon tax, about double the number under Alberta’s previous rebate system. Since the rebates are universal, lower-income families will benefit more, spending less and making less but getting the same rebate as a higher-income household.
The federal government says the average Alberta household will receive about $880 under the rebate program, or around $170 more than it is expected to pay.
The day before the federal tax begins, Alberta’s justice minister would not say whether he believes this to be true.
“I don’t buy that at all. Look at Albertans right now. Alberta is struggling. We need jobs in this province,” he said.
Asked multiple times whether he was arguing that most Albertans would not benefit financially from the carbon tax, Schweitzer side-stepped the question, instead focusing on the argument that it’s not the federal government’s jurisdiction to impose the tax.
He also cited Alberta’s own efforts to reduce emissions as proof that the province does not need the federal program. The example at hand is the Alberta Technology Innovation and Emissions Reduction (TIER) plan, which also comes into effect Jan. 1. TIER replaces the NDP’s Carbon Competitiveness Incentive Regulation (CCIR) as a way to encourage large emitters to reduce their emissions.
Hodgson said he doesn’t buy the idea that the federal carbon tax, beginning at 4.4 cents per gallon, will affect consumers’ wallets the way some fear it will. He pointed out that gas prices can fluctuate daily by more than that, and said, “They’re getting basically all the money back through the income tax system.”
By 2022, the price per tonne will be $50, Hodgson acknowledged. But the revenues will still be recycled back to consumers, he said.
“The reason that system’s been chosen is because … they want the price signal to happen, but not to have an impact on people’s income,” he said. “And therefore, if you don’t consume gasoline, you actually come out ahead.”
Tombe agreed, adding that compared to the provincial tax which ended earlier in 2019, the federal one will be almost identical to consumers in terms of cost; the difference will be in how much they get back in the form of rebates.
He added that households in rural areas will get 10 per cent more back, in recognition of their higher average fuel use.
“At the individual level, it has nothing to do with your fuel use,” he said. “And that’s a big misconception here. … It’s not a refund.”
In other words, the less gas you use, the better, explained Tombe — it won’t change your rebate.
Farmers feel unfairly pinched
Outside Ontario, the strongest fight against carbon tax has been in all the Prairie provinces, and not just Alberta. It’s a movement that’s been led, in part, by farmers who say the tax unfairly punishes them.
Like Reed at the diner, Gunter Jochum seems resigned to the carbon tax.
“Honestly, the government is not going to move immediately to scrap the carbon tax. I think it’s here to stay,” he said Tuesday.
But as president of the Western Canadian Wheat Growers Association, Jochum says he wants to see the tax program change in a way that shifts the burden from farmers.
On Nov. 20, the association launched its “NoFarmCarbonTax” petition, asking the federal government to eliminate the carbon tax on farm-related gas use.
Similarly, at its annual general meeting in December, the Agricultural Association of Saskatchewan unanimously approved a motion to call upon the federal government to create a rebate specific to propane and natural gas used to dry grain.
The federal program does have certain exemptions for agriculture, but Jochum said those aren’t enough, and don’t apply to peripheral off-the-farm costs such as transportation.
Jochum said he’d prefer provincial carbon taxes, if the provinces could enact plans with more specific concessions for the agriculture industry.
“But in the long run, really, both provinces and the federal government are to blame right now,” he said. “They’re the only ones that can really make this go away … and we’re going to fight hard in 2020.”
With files from the Canadian Press, Nadine Yousif and Claire Theobald