The province is again pushing for a $25-per-tonne flat rate on carbon tax — along with exemptions on fuel for grain drying and heating barns — despite an ongoing spat with Ottawa.
At the same time, the province has announced that the PST will be dropping from seven to six per cent.
Both are set to come into force July 1.
Why it matters: Manitoba farmers were less than impressed with their grain drying bills last fall during one of the most challenging harvests in recent memory.
It’s welcome news for farmers, who have been calling for grain drying and barn heating fuel to join the other, already exempt, farm fuel uses. Farmers have pointed to the challenging harvest last fall, and subsequent jump in grain drying hours.
“This is something that we have continuously been working for and pushing the government for,” Jake Ayre, Keystone Agricultural Producers vice-president said.
Those exemptions do not exist under the federal plan although farm groups and opposition politicians have called for it.
The flat tax rate echoes Manitoba’s original planned rate, announced in 2017. In 2018, Pallister said he would drop the tax completely, citing lack of co-operation from the federal government. In 2019, the federal government imposed its own carbon tax rate on the province, leading the province to file an ongoing legal challenge against the imposition of the tax.
In early 2020, Premier Brian Pallister said he was asking the federal government to take a second look at the province’s plan.
Pallister says the provincial plan will save Manitobans more than a billion dollars compared to the federal plan over the next five years.
“Unfortunately, the federal government ignored our request to work together as a true partner in tackling climate change, so we have no choice but to act now to protect Manitobans from the rising federal government carbon tax it is bringing in this year,” Pallister said in a March 5 release.
Canada’s Environment and Climate Change Minister Jonathan Wilkinson says the federal government has not yet received a formal proposal from the government of Manitoba.
“Once we receive its proposal, we will assess it against the federal benchmark as we have done with proposals from all provinces and territories,” he said via email.
Those federal benchmarks are currently higher than Manitoba’s announced rate.
The carbon tax, announced at $20 per tonne in 2019, but set to rise to $50 per tonne by 2022, currently sits at $30 per tonne. The federal government says that rate will increase by $10 per tonne every year until 2022, when it will reach $50 per tonne.
Wilkinson says that approach has remained unchanged since Canada’s national green plan, released in 2016.
“A price on pollution is an effective and affordable way to cut pollution, and under the federal backstop in Manitoba – it leaves the vast majority of families better off and provides $486 to a Manitoba family of four this year when they file their taxes,” Wilkinson said.
“We are committed to working collaboratively with Manitoba and, as the premier himself referenced, we have been engaging in ongoing discussions on how we can work together. Ensuring that pollution pricing systems across Canada continue to meet the minimum federal standard is a core principle in our engagement with provinces and territories in order to maintain the fairness and effectiveness of pollution pricing in Canada.”
The Manitoba government, meanwhile, has disputed the federal government’s claim that it has not received a proposal.
Manitoba Agriculture and Resource Development Minister Blaine Pedersen said the federal government has had the province’s proposal for months, while negotiations have been ongoing. The federal government has not, however, responded to the March 5 announcement of a flat rate, Pedersen said.
The province has long argued that the federal plan does not consider Manitoba’s investment in hydroelectricity, high proportion of agricultural emissions (which are largely exempt), or small industrial sector, which they say would find cost-effective emission reduction difficult.
Pallister has argued that the Manitoba plan will drop the province’s emissions by “at least” two megatonnes over five years.
The province has also argued that the PST drop will more than equal the cost of the levy in an average household. The province estimates the reduced PST will save Manitobans $325 million annually, $40 million more than the green levy would cost.
In late 2019, KAP called for producers to share their grain drying bills in an effort to get hard data on how much carbon tax cost those farmers last year. In January 2020, KAP released those initial numbers. The farm group estimated that carbon tax had cost corn producers alone about $1.7 million, or $3.69 per harvested acre, in carbon tax.
“We also recognize that there is a significant amount of grain drying that has happened for canola production and wheat production,” KAP president Bill Campbell said at that time.
The group has received yet more data for both barn heating and grain drying since then, KAP has said. The group says it is still crunching those numbers.
KAP executives initially said they hoped to bring their data to Ottawa at the end of February during meetings of the Canadian Federation of Agriculture.
KAP also held meetings with various members of parliament on the issue, Ayre said, although the data was not presented.
The issue also came up when KAP’s Manitoba Young Farmers met with federal Agriculture Minister Marie-Claude Bibeau during her visit to Winnipeg last month.
But while KAP has counted the province’s exemptions as a win, the group says it is still concerned over uncertainty, citing the ongoing back and forth between the provincial and federal governments.
“We just want a permanent solution on this issue,” Ayre said. “It’s been an ongoing discussion for a few years now between both levels of government and our ask is that we just want to have some certainty in the marketplace. We want to know where this is. And we want to know moving forward how we can continue to contribute to the conversation in regards to climate change and the environment.”
Pedersen, however, maintains there is no uncertainty on the part of the provincial government.
“It’s now really up to the federal government whether it will accept our plan or not and if it doesn’t accept our plan, the federal government will have to decide what it is going to do,” he said. “We’ve made it very clear what our plan is.”
Pedersen urged KAP to lobby the federal government to accept Manitoba’s plan.