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Alberta Increases Carbon Tax to Match Ottawa’s, While Manitoba Proposes Lower Rate

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Despite continuing court action seeking to overturn the federal floor price on carbon, Alberta has announced an increase in its industrial carbon tax, while Manitoba looks to introduce a tax regime that still falls short of the federal one.

In Alberta, Premier Jason Kenney “confirmed that his United Conservative Party government will increase the rate of its Technology Innovation and Emissions Reduction levy, or TIER, from its current price of C$30 a tonne to stay within the federal requirements,” the Globe and Mail reports [1]. A $50 per tonne levy is what it will take to prevent the Trudeau government from imposing its own price.

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“Ottawa approved Alberta’s industrial carbon pricing system last fall but made it clear the province would only see a long-term reprieve from the national tax if the price increased in step with the federal benchmark, which is set to hit $50 by 2022,” the Globe explains. “The province had yet to commit to that.”

But now, “we are tracking the federal price for our major emitters’ portion,” Kenney recently told the Globe. “We’re going to $30, to $40, to $50. It’s in our budget.”

Dale Beugin, vice-president of research at the new Canadian Institute for Climate Choices, called that decision an endorsement of the pan-Canadian climate plan. “We know climate policy has to get more stringent all across the country over time, and the way to do that is to gradually increase stringency, whether it’s the price of carbon or the aggressiveness of regulation,” he said. “This feels like a step in exactly that direction.”

Pembina Institute Alberta Regional Director Chris Severson-Baker agreed the $50 threshold is a step in the right direction, but noted that a higher carbon price will be needed at both the federal and provincial levels.

In Manitoba, meanwhile, Premier Brian Pallister is proposing a flat $25-per-tonne carbon tax, coupled with a one-point reduction in the provincial sales tax, to take effect July 1. “Pallister’s Tories are fighting the [federal] tax in Federal Court and have intervenor status in Saskatchewan’s challenge later this month before the Supreme Court of Canada,” The Canadian Press notes. But the premier “said he hopes the federal government will abandon its demands and accept Manitoba’s lower price, since his province has been much more open to a carbon tax than Saskatchewan, Alberta, and Ontario.”

$25 per tonne was the price Manitoba originally proposed in 2017, only to withdraw it when the federal government said it was too low. With the federal floor price set to increase to $30 April 1, CP says Ottawa was standing its ground last week. “Ensuring that pollution pricing systems across Canada continue to meet the minimum federal standard is a core principle in our engagement with provinces (and) territories in order to maintain the fairness and effectiveness of pollution pricing in Canada,” Environment and Climate Minister Jonathan Wilkinson said in a statement.

Brandon University political scientist Kelly Saunders said Pallister may be looking for a middle ground before the Supreme Court of Canada rules on the Saskatchewan case, after two of three lower court decisions backed Ottawa’s authority to impose its tax. “Many legal experts are saying the Supreme Court will likely rule that the federal government does have a right to set tax in this area, so maybe (Pallister) is anticipating and trying to pre-empt that,” she said.