Conservatives and former MLA call for NWT carbon tax exemption

Former Nunakput MLA Jackie Jacobson says he’s seen first-hand the carbon tax’s impact on the already high cost of living in the North.

“The carbon tax has driven a lot of families into more worry than anything,” said Jacobson, who lives in Tuktoyaktuk. “It’s not a good plan and they should just scrap it.”

Jacobson joined Bob Zimmer – a Conservative MP from BC and the party’s shadow minister for northern affairs and Arctic sovereignty – outside NWT Liberal MP Michael McLeod’s Yellowknife office on Wednesday. The two held a press conference calling for an end to the federal carbon tax, particularly for northerners.

The tax is part of the Liberal government’s plan to reduce carbon emissions and avoid a worst-case climate change scenario. Northerners have already seen the impacts of climate change on their doorsteps, ranging from devastating fires and floods to increased coastal erosion.

But critics say the carbon tax is unfair to northern residents who face high living costs and have limited or no clean alternatives to fossil fuels.

Jacobson, who has served three terms as Nunakput’s MLA but did not defend his seat in the recent territorial election, has long been a fierce critic of the federal carbon tax – and the territory’s effort to implement it. Zimmer called him a “carbon tax warrior.”

Now, Jacobson said he hopes to get into local government to continue advocating for his community and fighting the carbon tax.

“The trucking and food companies are getting blamed for the federal government’s wrongs,” he said. “They’re pointing fingers at everybody but themselves.”

Carbon tax and food prices

Zimmer said food costs have “skyrocketed” because the carbon tax has increased shipping costs. He gave the example of a grocer in Dawson City, Yukon, who he said had reported a more than 90-percent transport surcharge from fuel alone.

Zimmer also pointed to an opinion piece written by former NWT Chamber of Commerce executive director James O’Connor in January, which argued increasing the carbon tax would be a “major threat” to businesses in the territory.

Some economists, however, say the carbon tax isn’t such a big factor in the rise of food costs across Canada.

The Bank of Canada has estimated that carbon tax contributes 0.15 percent to inflation overall. Trevor Tombe, an economist at the University of Calgary, estimated the tax is responsible for less than one percent of grocery price increases.

Statistics Canada reported last November that supply chain disruption, labour shortages, changes in consumer purchasing patterns, poor weather in some growing regions, tariffs, high input costs and higher wages are all factors contributing to the higher prices people are paying, while economists have attributed some of the rise to extreme weather and the Russia-Ukraine war.

MP McLeod’s response

McLeod, the NWT’s sole MP, said he’s concerned by some Conservative plans related to fossil fuels and the environment.

He said it was “disappointing” to see the party oppose an effort to reduce the impact of climate change in a territory where more than 60 percent of the population recently evacuated due to wildfires, while several communities have been affected by floods.

“At some point it will be too late to avoid the impact of climate change,” he said. “It’s already a different world out there, and soon it’s going to be unrecognizable. As a grandparent, I am very worried.”

In response to concerns about the impact of the carbon tax on the cost of living, McLeod said that was an issue in the North long before carbon pricing.

In the NWT, McLeod added, many residents receive carbon tax rebates. Under the territorial government’s former annual home heating rebate, he said, the amount he and his wife received was more than what they paid in carbon pricing on heating fuel.

“All parties have accepted that we have to do something to slash greenhouse gas emissions,” McLeod said, noting that under leader Erin O’Toole, the opposition party had proposed its own carbon levy.

“If Conservatives were in power tomorrow, they would implement their own policies and northern families would be still struggling with the cost of living and inflation.”

Carbon tax in the NWT

The federal carbon tax was introduced by the Liberal government in 2019 with the aim of incentivizing people and businesses to reduce greenhouse gas emissions that contribute to climate change.

The NWT has its own version of the carbon tax that meets federal requirements, having taken advantage of an option that allowed provinces and territories to either design their own system or default to the federal plan, known as the backstop. The NWT government opted to create its own carbon tax with the aim of keeping more control over the revenue.

But the federal rules have evolved over time, and the territorial version has had to change with them.

For example, Ottawa introduced changes in April 2023 that increased rates and banned rebates that directly offset, reduce or negate the tax.

In the NWT, that meant scrapping the home heating rebate – which had been a key part of the territory’s system, shielding residents from the carbon tax on heating fuel.

Several MLAs, including Jacobson, argued the federal changes punished residents in northern communities that rely on fossil fuels. Other MLAs criticized the territory’s plan, saying large emitters were being overly favoured compared to other businesses.

In March, federal northern affairs minister Dan Vandal defended the federal changes to the carbon tax, pointing to rebates and federal funding for clean energy initiatives in the NWT.

Some fuels, including aviation fuel purchased in the NWT and fuel delivered to or purchased by a First Nations band on a reserve, are exempt from the carbon tax.

Conservatives pledge to ‘axe the tax’

Conservative Leader Pierre Poilievre and his party’s members have advocated for national exemptions to the carbon tax. He has vowed to scrap the tax altogether if his party forms a government following the next federal election.

Poilievre has held “axe the tax” rallies across Canada, including one in Whitehorse in September, which had been rescheduled following wildfires.

Asked if Poilievre plans to visit the NWT, Zimmer said the party leader is “a very busy guy” but he hopes that will happen.

“I’ll just say: stay tuned on that,” Zimmer said. “We’re working hard to make that happen.”

In a statement, Liberal Party spokesperson Parker Lund asserted that Poilievre and his party are spreading disinformation and climate denial.

“Michael McLeod and Justin Trudeau are hard at work delivering strong climate action, making life more affordable, and building an economy that works for everyone in the Northwest Territories,” the statement read.

Trudeau said last month that his government would pause carbon tax on home heating oil for many rural families for three years, a pause designed to allow them time to switch over to heat pumps. That’s expected to largely benefit residents in Atlantic provinces, and there are questions over how effective heat pumps can be in the North.

While supported by the New Democrats, the Conservatives’ motion to exempt all forms of home heating from the carbon tax was recently defeated by the Liberals and Bloc Québécois.

The Conservative Party is now pushing for the federal government to exempt fuels used in some agricultural activities.

Results from a recent poll by the Angus Reid Institute of 2,512 Canadians – which did not include residents from the territories – found 42 percent of those surveyed want the carbon tax abolished. Twenty-six percent of respondents said they would pause additional tax increases and 17 percent said they would lower the tax over the next three years, while 15 percent said they would continue with price increases as scheduled.

Several respondents cited concerns about the cost of living, while others questioned whether paying a carbon tax is having a real impact on climate change.

Instead of the carbon tax, Zimmer said governments should look at “technology not taxes” to address climate change. As an example, he highlighted mining for critical minerals needed in electric vehicles.