In a surprise move, the provincial government announced last week it will not move ahead with the proposed $25/ton carbon tax that was set to take effect later this year.
In explaining the change, Premier Brian Pallister said the province did not receive assurance from the federal government that it wouldn’t implement additional carbon taxes within Manitoba to eventually bring the rate up to $50/ton.
The Winnipeg Chamber supported the province’s original plan for a made-in-Manitoba carbon tax as it gave the provincial government the opportunity to design a tax and distribute revenue in a way that reflected local priorities.
Our recommendation was that carbon tax revenue should be allocated toward:
1) helping industry transition to lower carbon operations;
2) investing in clean technology and the development of more green industries in Manitoba;
3) infrastructure improvements that contribute to carbon reductions; and
4) relief for low-income Manitobans who might have trouble absorbing an additional tax.
While the province had indicated a preference for using carbon tax revenue to pay for offsetting personal income tax and sales tax reductions, we were hopeful it might reconsider, and we were pleased the decision was Manitoba’s to make.
The Chamber is disappointed the federal government will not give Manitoba time to demonstrate whether its tax model could be as effective as the proposed federal tax in reducing greenhouse gas emissions.
“If it's a choice between a higher tax or Manitoba pushing back, we support the province in pushing back,” said Chamber CEO Loren Remillard.
While the province won’t be implementing a carbon tax, it will still proceed with its Climate and Green Plan which outlines options to reduce carbon emissions by more than a megaton over the next four years.
Waiting on Ottawa
While the provincial carbon tax is dead, that means a new federal carbon tax is on the way instead. The federal government has clearly stated it will begin charging a $20/ton fee in January 2019 in any province that doesn’t have its own carbon tax scheme (or equivalent) in place. That fee will increase by $10 per year until it reaches $50/ton.
However, Ottawa has not been as clear on what it intends to do with the carbon tax revenue. While revenue will be returned to the province where it’s collected, it’s unknown at this time whether that will be through a direct payment to individuals, by flowing the money through the provincial government, or another option.
That uncertainty is a major concern for the business community, which will bear a significant portion of the cost of the carbon tax. The Winnipeg Chamber will be following this issue closely and having direct conversations with federal representatives on how they can implement a carbon tax without stifling economic growth in Manitoba.
Director of Policy