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NWT residents won’t have to pay carbon tax on diesel home heating fuel from the start of April, the territorial government says.
In a news release, the GNWT said customers “will receive a point-of-purchase rebate on all diesel home heating fuel purchased in the NWT until March 31, 2027.”
The move brings the NWT in line with jurisdictions that fall under the federal backstop – the carbon tax as designed by the federal government.
Unusually, the NWT has its own “made-in-the-North” tax that meets federal rules but isn’t exactly the same as the federal tax, a distinction that meant the GNWT had to separately implement a home heating fuel exemption when Prime Minister Justin Trudeau announced one for most of Canada in October last year.
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The process of granting an exemption in the NWT was further complicated by the territorial election, which introduced some political uncertainty as the territory sought to mirror the federal announcement.
The GNWT said its tax suspension only extends to diesel home heating fuel, and not other fuels used to heat homes, because of federal restrictions.
“The Government of Canada’s decision to suspend the carbon tax on light fuel heating oil under the federal system provided the Government of the Northwest Territories with the opportunity to mirror the change under the NWT’s carbon tax,” read a statement issued by the territory on Tuesday.
“The NWT may copy the federal carbon tax relief but cannot extend the relief to other heating fuels. This would make the territory non-compliant with the federal carbon pricing rules.
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“The carbon tax will continue to be applied to propane and natural gas for all uses.”
Cost of living offset payments, designed to “reduce the carbon tax burden on residents,” will continue to be issued quarterly – but will now be reduced, so your payment won’t be as large, regardless of the fuel you use.
For a family of four, the annual total of those payments will go down by about $400 to $800, depending on where you live.
As an example, a family receiving $2,872 in annual offset payments in the Beaufort Delta might now receive $2,008 instead, the territory stated.
“Even with this reduction, COLO payments remain higher than the carbon tax paid by most NWT households,” the GNWT added in its statement.
Finance minister Caroline Wawzonek, who has long argued that the federal government’s carbon tax requirements aren’t fair to NWT residents, said in a statement: “We need flexibility on the application of the federal carbon tax in the Northwest Territories, particularly with respect to heating fuel, to avoid raising the cost of living for residents and creating more barriers to northern economic development.
“We will continue to advocate for the introduction of a carbon tax model in which Canada fully recognizes the challenges faced by residents and businesses in the Northwest Territories and asks those who have benefited most from historic GHG emissions for more meaningful support towards a green energy transition for those regions who are now on the front lines of climate change.”
A previous incarnation of the NWT’s carbon tax did exempt all home heating fuel, meaning no NWT residents paid any carbon tax to heat their homes.
But the federal government changed the rules in 2022, telling the territory it had to ditch the full rebate it was offering on all home heating fuels. That earlier rebate was consequently scrapped in early 2023.
