Manitobans will pay a carbon tax, but how much may depend on the courts.
Last week Premier Brian Pallister reiterated Manitoba will implement a ‘made-in-Manitoba’ carbon tax, but added the federal government’s plan to impose a $50-a-tonne carbon tax, starting at $10 in 2018 and peaking by 2022 if provinces don’t do it themselves, is too high and unfair. It ignores the huge investment Manitobans have and will continue to make to generate clean hydro electricity.
Before fully unveiling its plan, Manitoba is seeking a legal opinion on the constitutionality of what Ottawa proposes, Pallister told reporters June 29.
“We will introduce a carbon price in 2018, but it will be a carbon price that is fair and fully aligned with the clean, renewable electricity we already produce and that reflects the economic realities of our provincial economy,” the Manitoba government said in its response to the Proposed Federal Benchmark and Backstop for Carbon Pricing issued in May.
“The federal ‘backstop’ takes no account of this interplay between higher electricity rates due to clean energy investment and higher fossil fuel rates brought about by carbon pricing,” Pallister said.
“Manitoba must and will take this into account with its ‘made-in-Manitoba’ plan.”
Saskatchewan Premier Brad Wall has also vowed to go to court to block the federal government from imposing a carbon tax in his province if Saskatchewan doesn’t do so.
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While Pallister won’t release details of Manitoba’s plan until fall, presumably the tax will be less than what Ottawa promises, or perhaps will include exemptions for industries that can’t pass the tax on, such as agriculture.
“We don’t believe that any carbon tax plan that the federal government advances should be applied to Manitoba farm families,” Pallister said in an interview May 11.
But when asked if it was inaccurate to say Manitoba’s plan would exempt agriculture, Pallister replied: “Probably, because I am talking at the farm gate here.
“By saying that (we’re going to exempt agriculture) you’d be saying all related and secondary suppliers and so on… (and I) don’t think we can realistically make that claim.
“But I do want you to get the general gist that we are very concerned where people cannot recover an input cost… in particular when they are in an industry as critical as agriculture is to the province of Manitoba.”
In May and again last week Pallister stressed Manitoba is “99 per cent clean” because of renewable, carbon-free hydro electricity.
“We have invested more in green infrastructure through hydro and other means than any other province,” Pallister said May 11. “So we have already paid in one sense. But by saying that, I am not suggesting we shouldn’t do our part. Manitobans, I think, have a great reputation for always punching above our weight.”
On a per capita basis, Manitoba’s investment in renewable energy remains amongst the highest in the country, Pallister said last week.
“The Keeyask generating station and Biopole III transmission line, now under construction, will cost the province $6.5 billion and $4.6 billion respectively, once completed, or $10,500 for every Manitoban.”
Pallister told reporters if Manitobans burned cheaper fossil fuels to generate electricity instead of using hydro the province’s current annual carbon emissions of 21 megatons would double to 42.
The response document says taxing carbon may address a higher proportion of fuel or energy emissions in some jurisdictions, but the tax will be less effective in Manitoba and hurt Manitoba’s three biggest industries — agriculture, manufacturing and transportation.
“The federal government has allowed existing greenhouse gas reduction plans in Ontario and Quebec to count as their participation in the plan,” Pallister said. “But at the same time they are insisting that we must conform with their plan even as they will not incorporate our existing provincial, successful approach.”
The response document says a $50-a-tonne carbon tax is too much for Manitobans. Every $10 a tonne in carbon tax would yield about $100 million in annual revenue; $50 a tonne would generate about $500 million, costing the average household $335 a year.
“Over the five-year period of the federal carbon pricing ‘backstop’ that would amount to over $1,000 paid by the average Manitoba household,” the document says.
The federal government says each province can decide how to use its carbon tax revenues. One option is to rebate some of the earnings to lower-income families, or those in rural, or northern areas where there are fewer alternatives to fossil-fuelled vehicles.
Another option is cutting income taxes to make carbon tax revenue neutral.
The Keystone Agricultural Producers wants fuel used to produce crops or livestock exempted from a carbon tax.
Some farmers have suggested producers pay the tax and then apply for a rebate — an idea Pallister dislikes, saying it’s too bureaucratic.
Under the Paris agreement to mitigate climate change Canada agreed to cut its greenhouse gas emissions 30 per cent from 2005 levels by 2030.
Pallister, who says climate change is real, agrees with the targets.
“All governments must play a role in addressing it,” he said. “What we do not support, however, is the federal government imposing a one-size-fits-all solution with no flexibility and no accounting for the leadership Manitoba has already shown on this important file.”