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Federal carbon tax could bring rebates to Sask. but at a price

How an imposed carbon tax could affect Saskatchewan

Ottawa has released draft legislation for their proposed carbon tax, and if it is imposed on Saskatchewan it could mean rebates for taxpayers.

In the federal plan, all carbon tax money collected in a province would remain in that jurisdiction. However, the provincial government would not have a say it how it is spent. The federal government plans to give that money directly to taxpayers.

Economics postdoctoral research fellow at the University of Regina Brett Dolter said there is provincial risk in this strategy.

“The provincial government has not wanted this policy, but at some point it might be wise to say we’re going to take it on and design the way we spend the money in a way that works best for Saskatchewan,” he said.

Environment Minister Dustin Duncan maintains the best plan for Saskatchewan has already been presented; the plan he announced late last year, Prairie Resilience. That plan emphasizes investment in technology buying carbon offsets.

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“It goes back to specifically the Vancouver Declaration, that provinces would have the ability to put in place a fair and flexible program that worked for each jurisdiction. That’s what we’ve put forward to the federal government,” Duncan said.

“It’s our position that this is an acceptable plan for the people of Saskatchewan and we shouldn’t have a tax imposed by Ottawa.”

READ MORE: Ottawa explains how carbon tax revenues would be used

Federal Environment Minister Catherine McKenna has said this plan likely won’t meet federal emission standards, as it focuses on heavy emitters and not the whole economy.

The provinces now have until September to submit carbon plans to the federal government that meet standards, or face an imposed carbon tax.

Opposition leader Nicole Sarauer said Saskatchewan’s current direction leaves key industries at risk.

“If we don’t have a made-in-Saskatchewan solution we won’t see protection for some of our biggest industries; agriculture and our natural resource sector. That’s why it’s so important,” she said.

READ MORE: Sask. environment minister unveils carbon tax free climate strategy

Ottawa’s potential plan would not see heavy industrial emitters, like Regina’s Co-op Refinery, pay an outright carbon tax. Instead, these heavy emitters would only be taxed on emissions that exceed a specific target.

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“With carbon pricing, if we have a sector that’s trading internationally, we want to be able to offer some sort of protection so they can go up against competitors and not be at an unfair [disadvantage],” Dolter explained.

“For Evraz Steel, you do want to look at a policy like the federal government backstop or like Prairie Resilience plan that the provincial government put out.”

Agriculture is a trade exposed industry that does not see the same protections in the federal plan. Farmers can receive a tax exemption for fuel, but Agriculture Producers Association of Saskatchewan (APAS) president Todd Lewis said there are hidden costs.

“It’s more than just the tax on a farm fuel for instance, the tax will be paid extra by the railroads, fertilizer providers, all of our inputs will show some of the tax inputs broad base,” Lewis said.

Taxes, that ultimately lead to increased costs for farmers. Past the farm gate, that likely means higher costs for local consumers.

“We’re in competition, we take world prices and the world price is world price. We don’t have a chance to recapture any extra carbon pricing,” Lewis said.

Lewis says he would like to see Ottawa give the agriculture more credit for the carbon sinks created through routine crop growth and rotation.

With files from The Canadian Press