NWT minister dislikes his own carbon tax, hopes it gets repealed

The NWT’s planned carbon tax edged closer to becoming law on Thursday, even as its author admitted he doesn’t like it.

Robert C McLeod, the finance minister, declared “I’m not a fan of the tax” but said it was either that or foist a worse federal version on NWT residents. McLeod said he’d support destroying the legislation the moment any future federal government let that happen.

Plans devised by McLeod’s department were partway through a final examination when MLAs halted for the night on Thursday.

Several regular MLAs expressed reservations or outright opposition. Three publicly pledged to reject the two carbon tax bills in question.

The carbon tax is virtually useless for the purpose for which it was intended. CORY VANTHUYNE, YELLOWKNIFE NORTH MLA

“There is going to be a carbon tax, regardless,” warned McLeod, noting the Liberal government is committed to introducing a federal backstop if the NWT does not create a tax of its own.

The tax was set to be introduced in July but was delayed by two months. The NWT government intends for it to come into effect in September.

Some MLAs say implementing this tax so close to an election – one the Liberals may not win – is senseless, particularly as McLeod openly admits the tax only exists at Ottawa’s behest.

“If the Liberals win, there is going to be a carbon tax. If … the Conservatives win, we may not have a carbon tax at all,” said Tu Nedhé-Wiilideh MLA Tom Beaulieu, who suggested the NWT deserved a complete exemption.

“The reason we are here having this discussion … is we have already asked the federal government to give us an exemption. And we know what their answer was,” replied an exasperated McLeod, who is not seeking re-election this fall.

“I can’t stress this any more importantly: nobody is a fan of the tax,” the finance minister said. “I’m not a fan of the tax. But these are the cards we’ve been dealt.

“If a new federal government decides it is going to repeal the carbon tax, I would assume a future [NWT] government would amend the legislation so quick, it would probably be one of the fastest pieces of legislation to ever go through this assembly. And rightfully so.”

‘Virtually useless’

Thursday’s discussion saw MLAs begin to examine, for the last time, two contentious bills that jointly introduce the tax and a series of associated rebates and offsets.

Several speakers seized their final opportunity to express long-held concerns about:

• the process by which the territory arrived at its carbon tax model;
• the transparency residents could expect when it comes to reporting on the tax; and
• whether the tax will actually make any difference to climate change.

“As a northerner, I have seen the frightening impact of climate change up close,” said Yellowknife North MLA Cory Vanthuyne. “I believe every one of us should be doing what we can to modify our behaviours. I just do not believe that this carbon tax is the way for us to get there.”

Vanthuyne said the carbon tax would have been “utterly unconscionable” without the planned inclusion of a 100-percent rebate on heating fuel at the point of sale.

However, he added: “The unintended consequence of this policy decision is that any behavioural changes that might have been brought about will also be mitigated. This rebate, while welcome, makes the carbon tax virtually useless for the purpose for which it is intended.”

Alongside the heating fuel rebate, the NWT’s carbon pricing plan includes exemptions for aviation fuel and a cost-of-living offset designed to help residents with other additional costs brought on by the tax – the main one being the tax on gas for vehicles, which everyone will have to pay.

Finance minister McLeod says that means many households will earn more from rebates than they end up paying in tax.

Applied to a household featuring a couple with children, the NWT government argues its cost-of-living offset could mean the household pays around $350 extra per year through carbon pricing – but receives $750 back from the cost-of-living offset. In other words, the household gains around $400 annually.

“I am not saying we will be able to mitigate all aspects of carbon pricing,” McLeod conceded on Thursday. “It is a tax, and nobody likes a new tax.”

Sound public policy?

Community governments have said they believe the tax plan is workable from their residents’ point of view – but not for the governments themselves, which are able to access fewer rebates.

As a result, governments like the City of Yellowknife have argued, the communities will have to pass additional costs on to taxpayers and so the same residents will end up paying more than advertised.

Rebecca Alty, Yellowknife’s mayor, said this week the carbon tax bill was not ready in its current form and should be delayed until after the federal election if no changes could be made.

Alty is not the only one who thinks passing carbon pricing legislation so close to election season may be a bad idea.

“We are heading into two elections that could undo this entire carbon pricing plan and render it unnecessary,” said Kam Lake MLA Kieron Testart, referring to a federal Conservative campaign that involves abandoning implementation of carbon pricing.

“Members of this house urged the government to bring forward a carbon pricing plan early in the life of the assembly, and that did not happen until the very end – the dying days of this assembly,” Testart continued.

“Now we are in a position where a carbon tax will be implemented during two elections and the outcome is not so certain. This is not the way to roll out sound public policy.”

‘Real action’

Testart, Vanthuyne, and Frame Lake MLA Kevin O’Reilly declared they would oppose the bill becoming law.

“We don’t have climate-change leadership yet,” O’Reilly said of the cabinet’s more general approach to the issue. “There is no coordinated reporting, no structure or organization that is going to establish the necessary leadership to ensure that we start to take real action on climate change.”

Of the bill, O’Reilly said: “This is a made-by-cabinet approach. We need to send this back and let the 19th Assembly (the next NWT government after the fall’s election) develop a real plan for the climate crisis. This is not going to help us get there.”

O’Reilly and Yellowknife Centre MLA Julie Green felt the NWT should have more closely pursued the Yukon’s approach to carbon pricing. In the Yukon, the carbon tax is a variant of the federal backstop.

Department of Finance staff said there was no guarantee an NWT variant of the federal backstop would have looked the same.

Consideration of the bills was due to resume on Friday. As things stand, the territorial government has only six working days in the legislature remaining to pass legislation before the fall election period begins.