Gas pumps

By Shaun Penner

Cabon tax - a taxing issue

Petroleum Analyst says carbon tax isn’t working

Jun 15, 2019 | 9:29 AM

CALGARY — The Federal Government says their version of the carbon tax is to hit the Alberta beginning in the new year, and drivers can expect to see gas prices go right back to where they were before the provincial tax was scrapped at the end of May.

Senior Petroleum Analyst with gasbuddy.com Dan McTeague says that drivers across Alberta will see a 4.6 cents per litre tax immediately on New Year’s Day 2020, with 2.3 cents to be added to that on April 1.

“I guess the party’s over. Ottawa is ending the party,” said McTeague. “And of course, every year it will increase by 2.3 cents a litre until April of 2022. That sounds like a long way off, but in fact it will push prices up to about… 12 cents a litre.”

The current federal carbon price is set at $20 per tonne on fossil fuels and is set to rise to $50 by 2022. However, the Parliamentary Budget Office says that may not be enough to meet its Paris Agreement targets, further adding that the price would need to be at least five times what it is now.

A report released on Thursday by the PBO says an additional levy of at least at $6 per tonne would have to start being applied in 2023 and go up as high as an additional $52 by 2030. Combine that with the current federal price, that would add up to $102 per tonne. That would mean for the average consumer at the pumps, an additional cost of 23 cents per litre would need to be paid to meet those goals eleven years from now.

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That leaves McTeague very concerned about how Canadians can afford it. As a Liberal MP that served from 1993-2011, he says he worked closely with the Office of Consumer Affairs. That gives him some inside perspective on how heavy of a burden this can put on the average consumer not just in Alberta, but across Canada.

“We’ve come through a period where I think we are doing far more harm to ourselves then what we are trying to achieve and I think it is losing a lot of public,” said McTeague. “It certainly will when the cost of everything is made so unaffordable that most of us won’t be able to make ends meet. And, of course, at the end of the day, not be able to sell one extra barrel of oil.”

The Federal Government remains adamant that the tax will continue Canada’s fight against climate change, further saying that carbon pricing will not exceed the $50 a tonne beyond 2022, while in turn would give 90% of the money collected back to consumers every year.

Premier Jason Kenney and the rest of the United Conservatives ran on a promise to not only repeal the provincial carbon tax in Alberta but fight the federal government in the Supreme Court if they tried to place the federal tax on the Wildrose province. Kenney will more than likely stick to that campaign promise, but it doesn’t necessarily mean the tax will never see the light of day in Alberta.

The feds are riding a small victory claimed in Saskatchewan back in early May, where a 3-2 decision from the Saskatchewan Court of Appeals said the Federal Government was constitutional in placing the federal carbon tax on provinces that don’t have their own, under Section 91 of the Constitutions Act (Peace, Order and Good Government of Canada). Saskatchewan Premier Scott Moe and his government have filed notice with the Supreme Court of Canada that they will appeal that decision. Alberta, along with the governments of Manitoba, Ontario and New Brunswick have all said they will jump on board with Saskatchewan to fight that decision.

McTeague feels that the Supreme Court will feel quite different about that decision because the definition of Peace, Order and Good Government is too vague and narrow. He also points out that half of the provinces in Canada are fighting this tax, which points to a growing distain amongst the country of the effectiveness of this tax.

“I’m from Ontario. A democratically elected government campaigned on scrapping the tax and it was defeated. Alberta did the same thing, and of course those who are proponents for the carbon tax were defeated,” said McTeague. “I think we’re not only coming up to the judicial decisions, I think the popular decision here is that this is not the way to go.”

A lot has yet to happen before then, including a federal election this fall. Should the Conservatives win the election, leader Andrew Scheer has promised to repeal the carbon tax. To do that though, he would most likely need a majority to do so, but McTeague feels this issue could play a significant role in whether or not that becomes the case.

In the meantime, Albertans will continue to enjoy their days of carbon tax-free living throughout the rest of summer. McTeague says the price at the pumps for those making road trip plans into the long weekend should expect prices to be steady the rest of the way into the summer.

“I think what you see is what you’re going to get. I don’t see prices moving up anytime soon, unless of course suddenly there is an agreement on trade. These prices between $1.05 and $1.15 looks like the price you can expect to pay going into the Canada Day long weekend.”