Ottawa explains how carbon tax revenues would be used

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OTTAWA – The federal government is giving itself the legal wiggle room to give carbon tax rebate cheques directly to people in those provinces that refuse to impose a carbon tax of their own.

A draft legislative proposal released today spells out that any federal revenues raised by a carbon tax can either be returned to the government in the province where the money was raised, given directly to individuals or divided between the two.

READ MORE: Alberta conservatives eye flat tax, private health delivery in draft policies

Sources say Ottawa has committed that any province that voluntarily chooses to use the federal carbon price system will get the revenues to use how they see fit.

But those that have the system imposed on them for refusing to enact one that meets the minimum requirements could find themselves sidestepped, with Ottawa sending those rebate cheques directly to residents.

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Saskatchewan and New Brunswick are the two provinces that could be immediately affected; Saskatchewan has shunned the idea of a carbon tax, while Environment Minister Catherine McKenna has already discounted New Brunswick’s plan to rebrand its existing gas tax as a carbon tax.

Ottawa requires every province to have a system with a minimum $20 per tonne carbon price in place by Jan. 1, 2019, rising by $10 a year until 2022.

READ MORE: Provinces must give Ottawa carbon price plans by September