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Carbon tax for North revisited Yk MLAs divided on plan but agree on global warming and need to minimize fuel useLaura Busch Northern News Services Published Wednesday, December 12, 2012
Doug Ritchie from Ecology North pleaded with the legislative assembly's standing committee on government operations last week to pass the tax into law, complaining that no action has been taken after 10 years of discussions. He said the tax would allow the territory to benefit more from industrial projects and could set aside money to help Northerners deal with the added costs global warming will likely cause as permafrost melts and weather patterns get more volatile. However, even with years of discussion there seems to be a lack of information on what a carbon tax would mean for Northerners. "The biggest problem with carbon tax is that it has the word 'tax' in it," said Ritchie. He said the form of carbon "pricing" proposed by Ecology North is a revenue-neutral carbon tax. This would charge a base rate of about $10 per tonne of carbon emitted by a business or resident, similar to what B.C. enacted in 2008. This price would be scaled up over time because the real benefits of a carbon tax - cutting emissions and creating a larger pool of money to be redistributed using targeted tax rebates - are realized at about $30 per tonne of carbon emissions, said Ritchie. The term revenue-neutral means that all money collected through a carbon tax would be redistributed to NWT residents in the form of tax rebates. Exactly how much these rebates would amount to would be up to the government to decide while they put together a carbon tax bill. Ritchie cautioned that one of the drawbacks of a carbon tax is the added cost to low-income residents. This could be alleviated through specific tax rebates targeted to this group. The four regular Yellowknife MLAs present at Wednesday's meeting were divided on the issue. Range Lake MLA Daryl Dolynny and Robert Hawkins, MLA for Yellowknife Centre, said they are opposed to a carbon tax while Weledeh MLA Bob Bromley, a co-founder of Ecology North in 1971, and Frame Lake MLA Wendy Bisaro appeared to support the idea. Dolynny said he opposed the carbon tax during his 2011 election campaign and is not prepared to change his views. He said the tax will only add to the already high cost of living in the North and the population of the territory is so small that it is unlikely to help with international carbon emission goals. Hawkins described a carbon tax as an "administrative nightmare" that would be complicated and costly to implement. "It's not that we don't share the same goal, but we don't want to share the same vehicle," he told Ritchie. Both MLAs said while they believe in man-made climate change, and worry about the impact global warming will have on Northerners, they simply do not believe in a carbon tax. Bisaro suggested those in support of a carbon tax could get more residents on board by clearly describing how much carbon use could be offset and what the rebates would look like. "There is a lot of conflicting information," she said. Ritchie had the last word in the meeting and suggested that the government's current methods of promoting energy efficiency are not working. A carbon tax would be a new tax, yes, but it could be created as a tax shift, where charges previously put on goods and incomes could be replaced by added charges for polluting the environment. "We've been playing at this for 10 years," he said. "The old strategies have not been working." What does a revenue-neutral tax mean? A revenue-neutral tax has two parts: the tax itself, which is a flat rate based on how much carbon a user consumes; and tax reductions or rebates, Doug Ritchie of Ecology North explained to Yellowknifer. Exactly what the tax reductions and rebates might be should the GNWT adopt a carbon tax would be up to the government to decide if and when it draws up a carbon pricing plan. When B.C. introduced its revenue-neutral carbon tax in 2008, drivers paid an extra 2.4 cents per litre of gasoline and all lower-income residents were given an annual climate action credit of $100 per adult and $30 per child when the tax first came into effect. Since its introduction, the B.C. government has scaled up the amount of tax levied on fuel to an extra 6.67 cents per litre of gasoline, while all residents making less than $74,028 have seen their personal income tax rate reduced by five per cent and the province has established an annual Northern and Rural Homeowner benefit return of up to $200 per household. For businesses, the small business income tax rate on all business incomes under $500,000 in B.C. was reduced to 2.5 per cent from 4.5 per cent when the carbon tax was established. Also, the general corporate tax rate was reduced to 10 per cent from 12 per cent. B.C. residents were given PST exemptions on energy efficient products for an average of three years when the tax was rolled out, however, most of these exemptions have since been discontinued. Revenue neutral means that the government would be obligated to pay out 100 per cent of the money it takes in with a carbon tax but an individual is not guaranteed to get back as much money as they put in, said Ritchie. A taxpayer who is more energy efficient will get back more than they put in, while someone who is less efficient will pay out more. "That's the whole point," he said.
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