Alberta’s fuel tax holiday is a ‘back-door’ way to scrapping federal carbon tax, says Premier Jason Kenney

The Alberta government’s decision to temporarily halt the provincial gas tax is a “back-door way” to scrapping the federal carbon tax in the province, Premier Jason Kenney said.

At an unrelated press conference on Thursday, Kenney said he is opposed to the federal carbon tax because it is punishing people for consuming energy. He also told a reporter to talk to “regular Albertans” instead of “handpicked economists” after she asked why the province didn’t choose a policy that would benefit low-income families, such as direct cash transfers.

“I’ll go out on a limb here and say that the economists that you were talking to as the arbiters of truth on this are probably really big carbon tax fans. I’m not. I’m a big carbon tax enemy, as are most Albertans,” Kenney said.

“Those economists, the NDP and Liberals are in favour of carbon taxes that drive up energy prices. This is a fundamental philosophical difference. Albertans spoke to this in the last provincial election and we are fulfilling our commitment in a way to scrap the carbon tax.”

The comment comes after the province announced on Monday it will stop collecting the Alberta fuel excise tax. Starting April 1, Albertans will be given a break of 13 cents a litre at the pump.

It also comes after a University of Calgary School of Public Policy report released on Thursday said the fuel tax holiday is more beneficial for higher-income families because they purchase more fuel compared to lower-income families. Families who do not purchase fuel will not benefit from the holiday.

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“The fuel tax holiday is one of several policy options for supporting families strained by rising energy prices,” the report reads.

“One alternative is providing direct cash transfers: Jason bucks instead of Ralph bucks.”

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The report also says the tax holiday cannot be called a “reverse carbon tax” because it is tied to oil prices and only applies to two types of fuel: gasoline and diesel. The federal carbon tax applies to 22 types of fuels in Alberta, according to a chart by the Government of Canada.

“Relative to the carbon tax, which the government cites as an important motivation behind this policy, the holiday more than offsets it… The holiday, however, is not a ‘reverse carbon tax’,” the report reads.

“Choosing the fuel tax holiday comes with important opportunity costs — this money might be routed elsewhere. For perspective, support for post-secondary institutions’ operations was reduced $400 million in 2021/22 compared to 2018/19.”

Others say the fuel tax holiday will make a big difference for Albertans.

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“This will make a big difference… There is going to be an increase (in gas prices), but it will be minimized and mitigated by what the province is doing,” Dan McTeague, president of Canadians for Affordable Energy, told Global News on Monday.

In response to Kenney’s comments, Environment and Climate Change Canada (ECCC) said pricing carbon pollution is a central part of the federal government’s plan to reduce greenhouse gas emissions and is the lowest overall cost to the economy.

“Wherever the federal carbon pricing system is in place, all direct proceeds are returned to the jurisdiction of origin – the federal government does not keep one penny,” an ECCC spokesperson said.

The ministry also said the policy is designed so that most households receive more in Climate Action Incentive payments than they pay in increased costs because of the carbon tax. The federal government uses most of the proceeds to support individuals and households through Climate Action Incentive payments in Alberta, according to ECCC.

“Carbon pricing has been in place across Canada since 2019 through a mix of federal, provincial and territorial pricing systems. The federal government sets minimum national stringency standards that all systems must meet,” the ECCC spokesperson said.

“The federal carbon pricing system applies in any jurisdiction that requests it, or that does not implement its own system that meets these minimum standards.”