MLAs wonder who’ll benefit if NWT makes carbon tax changes

“My question is the value of this bill. What is the value of this bill for the residents that we serve?”

On Monday, Sahtu MLA Danny McNeely asked a question that’s central to how the carbon tax is perceived in the Northwest Territories. In effect: what is this tax actually achieving?

But McNeely wasn’t questioning finance minister Caroline Wawzonek, who usually bears the brunt of these concerns.

This time, he was asking Range Lake MLA Kieron Testart, who is proposing legislation that would change how carbon tax works in the NWT.

Testart wants to re-engineer the tax so that the federal government collects it but the NWT still gets to decide how the revenue is spent. (At the moment, the NWT does the collecting and decides how to spend the revenue. No matter what the territory does, it has to play by a restrictive set of federal carbon tax rules.)

Testart’s argument is that he isn’t rejecting the idea of a carbon tax, but it was Ottawa’s idea so let’s save some hassle by having Ottawa do all the collecting, then ask them for all the revenue and find new ways to spend it that aren’t quite the same as how the GNWT is currently spending it.

Wawzonek says Testart cannot promise the things he is promising and the federal government may not do anything like what Testart hopes they will (Testart acknowledged he doesn’t know for sure what Ottawa would do if his bill passes). Wawzonek contends that the NWT giving up what little control it has over the carbon tax makes no sense.

A territory trapped

Ironically, Monday’s committee meeting showed Testart coming up against many of the same obstacles Wawzonek usually faces.

Number one, the carbon tax is a federal tax. The NWT cannot hold a vote and get rid of it, and there is no legislation anyone can draft that will stop the thing from being there – unless the federal government (any federal government) gets rid of it.

So when MLAs or residents ask what Testart’s bill will do for people using propane, or how life will be better for residents if Testart’s bill passes, or what additional exemptions or rebates might be available, he has to give much the same answer Wawzonek gives, even though they’re arguing for completely different approaches.

“I don’t think anyone can make the federal government do what we want,” Testart was forced to tell Inuvik Boot Lake MLA Denny Rodgers when Rodgers asked if Testart’s bill would ease the high cost of living.

Number two, there is an immense lack of understanding about carbon tax as a whole, and this leads to whole conversations where nobody appears to be on the same page or using the same set of facts.

For example, the GNWT already issues payments to residents each quarter to compensate for the effect of the carbon tax. The territory says these payments are enough to cancel out the carbon tax’s negative financial impact on the average family, although that assertion is difficult to independently verify.

The payments are weighted according to where you live. If you’re in the Beaufort Delta, where heating your home costs more, you get a higher payment each quarter.

Much of the conversation online fully glosses over the existence of these payments – never mind whether the payments are enough (they’ve just been decreased) or whether they work well as a system – and even some of Monday’s discussion among MLAs appeared to do the same.

At times, it wasn’t at all clear that every MLA in the room shared the same understanding of what the tax already does and what Testart’s proposal would do.

Yellowknife Centre MLA Robert Hawkins, in effect a co-sponsor of the draft legislation and a member of Monday’s committee, spoon-fed Testart questions designed to spell out very clearly some key points – for example, that Testart cannot bring a bill into the room that gets rid of the tax, because it’s a federal tax. All he can do is tinker under the hood, which is also all Wawzonek can do.

In fact, both Testart and Wawzonek used the word “trapped” to describe the NWT’s present situation, even as they argued against each other in back-to-back appearances before five regular MLAs (Hawkins, McNeely, Rodgers, Richard Edjericon and committee chair Julian Morse).

“We’re still trapped in that first-stage discussion, which is: should we even have it in the first place,” said Testart, presenting his bill as a means of moving forward on carbon tax – of finding a way to have a settled tax that NWT politicians don’t have to constantly rail against or fiddle with.

About half an hour later, Wawzonek repeated this almost word for word, telling MLAs: “We’re trapped in this discussion about carbon tax.”

Wawzonek might accuse Testart of being the one doing the trapping by raising a bill that goes back, again, to the basics of how the NWT runs its federally mandated carbon tax. Testart might accuse Wawzonek of having failed to find a model residents can accept, necessitating yet another conversation.

Testart, ultimately, says his bill would put the NWT’s carbon tax on a similar footing to the ones used in the Yukon and Nunavut, which he asserts are much less controversial in those territories, and which he believes to be better systems.

He points out that Quebec and British Columbia are the only other Canadian jurisdictions using their own versions of the carbon tax instead of relying on Ottawa to impose one, and both Quebec and BC use entirely different approaches that existed in some form before the federal tax did.

Wawzonek says the NWT-designed system extracts tens of millions of dollars in revenue from the big mines – far more than is paid by ordinary residents and businesses – and little to none of that would be preserved under a federal system.

Smaller mines just being developed, she said, wouldn’t qualify for any federal special treatment at all, and would simply be hit with a huge carbon tax bill that might make them question even continuing on, damaging the territory’s economic future (which was at that moment being discussed a few blocks away).

Instead of arguing about how the NWT implements the carbon tax within Ottawa’s restrictions, she said, “let’s go and actually ask for some investments that can bring us to a situation where we’re not so fossil fuel-dependent.”

‘Jumping in blindly’

Testart’s bill needs to come through a third reading in the legislature to become law. Private member’s bills like this one, brought by regular MLAs rather than cabinet, are unusual. Ones squarely opposed to cabinet’s wishes have rarely succeeded in the NWT.

For all that the carbon tax elicits strong views in any conversation in the North, the level of public interest in this bill appears minimal from Morse’s assessment of the engagement so far.

Nobody from industry attended on Monday and no industry representative has submitted any written comments so far, he said. Nor has any member of the public.

One member of the public did show up on Monday. Even then, it transpired they had only attended because they thought they had missed the deadline for written submissions. They ultimately had to be lightly cajoled into speaking to the committee after realizing they could have just sent an email.

That member of the public was Nicole Sok, a Yellowknife resident who ran against Testart for the Range Lake seat in last fall’s election.

Calling the federal approach a “dumpster fire,” Sok told MLAs the GNWT could afford to be more vocal about its opposition – and could come up with better legislation that did a swifter job of activating tax exemptions when the feds dream them up, like the recent one for diesel home heating.

But Testart’s plan to hand control to Ottawa made no sense to her, she said, questioning how much of the NWT’s tax revenue the federal government might keep to cover the cost of collecting it.

“Are they going to work for free?” Sok asked, rhetorically.

“I don’t like jumping into things blindly and there are far too many unknowns to say, ‘You know what, let’s just give it back to them.’ It’s an emotional response, not a logic-based analysis of the situation.”

Handing back control of the carbon tax might lead Ottawa to conclude that the NWT doesn’t want control of its own affairs – even the limited control it has in this instance – and cut the territory out of future opportunities to have input, she warned.

“I don’t think what’s happened federally is any excuse to kick the can back to them,” she said, in reference to dissatisfaction at Ottawa’s handling of the tax.

“In fact, I think it’s all the more reason not to.”

You have until April 26 (sorry, Nicole) to send in a written submission. Check the Legislative Assembly’s website for instructions about how to do so.

Correction: April 11, 2024 – 20:50 MT. Initially, this report characterized Caroline Wawzonek as repeating Kieron Testart’s use of the word “trapped” without appearing to realize. Wawzonek later said she did so intentionally.