Carbon tax options explored
GNWT proposes several ways to recycle money back into economy
Emelie Peacock
Northern News Services
Friday, August 18, 2017
SOMBA K'E/YELLOWKNIFE
Yellowknife MLAs and environmentalists are debating what to do with money collected from a carbon tax.
Arctic Energy Alliance executive director Louie Azzolini shows off a solar panel Aug. 14. Azzolini says there are plenty of opportunities for households and businesses to reduce carbon emissions, yet what is often missing is a business sector to install and support these technologies, especially in remote communities. - Emelie Peacock/NNSL photo |
By the start of 2018, the territorial government needs to have a carbon price mechanism in place, otherwise the federal government will step in to administer it.
As part of an effort to gather feedback from residents, the GNWT has opened an online survey and released a discussion paper outlining what a carbon tax could look like in the territory.
The paper outlines different ways to use the estimated $12.6 million the carbon tax is expected to generate in its first year.
The first option is straightforward - use the tax to fund regular government programs and services.
The second is to recycle the money back into the territory, either through tax credits and rebates, projects to reduce greenhouse gases, or exempting fuels.
Kam Lake MLA Kieron Testart said he wants to see what comes out of public consultations, but tax credits could be a good way to put money back into people's pockets, especially those with low incomes and those whose traditional activities would be impacted by a carbon tax.
The paper proposes a rebate based on location to support remote communities heavily impacted by the tax, and heavily dependent on fossil fuels.
Craig Scott, executive director of Ecology North, said remote communities need to be looked at as a separate issue, as 16 per cent of NWT residents are in social housing and have their energy costs paid for.
"The groups that are going to need help are going to be private businesses in small communities," he said. "They are going to be burdened by this cost and they're going to need some support."
According to the paper, personal income tax rates could be reduced, yet the discussion paper states this could be complicated as tax rates need to be changed through legislation. The GNWT could also come up short if carbon tax revenues are less than the revenue they receive from reduced income taxes. The money could also be recycled into projects to reduce industrial carbon emissions, household emissions or create renewable energy infrastructure.
Frame Lake MLA Kevin O'Reilly said expanding programs run by the Arctic Energy Alliance would help households transition away from fossil fuels.
"The best way to get homes off of carbon intensive energy is to help design programs for energy conservation retrofits, and those are the sort of programs that Arctic Energy Alliance already delivers and we need to enhance those programs to make them more accessible to people on lower incomes," he said.
Louie Azzolini, executive director of the Arctic Energy Alliance, said the money could go toward financing existing programs that help households fine-tune their energy use or transition from diesel to wood home heating.
One of the main barriers Azzolini sees is the lack of a business sector able to support the changes households or community governments want to make.
"Having an active business sector, whose self-interest is serving the public, so that the public can adopt these renewables and energy efficiency incentives, helps to make it happen," he said.
Another option on the table is to exempt aviation, railway or marine fuel from the tax.
The federal government has imposed a carbon tax, but individual provinces and territories can decide how comprehensive the tax should be. In order to keep costs down, the government could choose to exempt certain fuels, which would bring in less money and have less of an effect on carbon emissions, but it would also be less of a burden to households and businesses. Craig Scott with Ecology North said his organization is against this option.
"The whole point of this is to reduce greenhouse gases so when you make exceptions for those fuels, they still burn greenhouse gases and they cause a lot of negative impacts that we're seeing in NWT," he said.
Stephen Verhaeghe, manager of fiscal policy and intergovernmental relations at the Department of Finance, said the NWT could end up with a mix of revenue recycling alternatives.
"We just wanted to inform the public what our thinking is and we're trying to gather the public's feedback through our consultation," he said.
Experts have already weighed in on what the preferred mix would be for the territory.
A 2011 study done by M K Jaccard and Associates for the GNWT proposed the model B.C. currently uses, where one-third of the revenue goes to corporate tax reductions and two-thirds to personal income tax reductions. Ecology North would like to see 50 per cent go to tax cuts and rebates, just under 50 per cent to investments in energy efficiency and green energy and a small percentage to administer the tax.
Yellowknife North MLA Cory Vanthuyne said a portion of the revenue needs to go to a government fund to deal with the harms of climate change. He added another portion could go to neutralizing the burden of the tax, for example through income tax reductions, and a third portion could support industry, government and homeowners to get off fossil fuels.
O'Reilly said he expects to see a mix of increases to tax credits and programs for households and industry to transition away from fossil fuels.
Residents can have their say on how they want the revenue returned by filling out an online survey on the Department of Infrastructure website. After the survey closes Sept. 15, the GNWT will present a proposal for consideration and
discussion in the fall
legislative assembly.
