New Brunswick Premier Blaine Higgs wants the federal government to let the province delay the planned increase to the province’s carbon tax by three months.
The province’s updated carbon pricing plan was accepted by Ottawa on Tuesday, but Higgs is already asking for changes to that deal.
All three of New Brunswick’s Atlantic neighbours had their proposals rejected and will have the federal backstop imposed on July 1. That’s three months later than New Brunswick is scheduled to raise its carbon tax.
“We really shouldn’t have another increase in carbon tax in April because the backstop has been moved from April 1 to July 1 for all of my counterparts, so that wouldn’t be fair to the residents of New Brunswick,” Higgs told reporters on Tuesday.
New Brunswick’s updated plan would see the province’s carbon tax rise by $15 to $65 per tonne of CO2 on April 1. That’s about 14 cents per litre of gasoline, up about three cents from this year.
In the province’s submission to Ottawa in September, New Brunswick Minister of Environment and Climate Change Gary Crossman said the province may change its proposal based on those of other provinces.
“New Brunswick is aware that there are ongoing discussions with other jurisdictions related to system design,” Crossman wrote to federal Environment Minister Steven Guilbeault.
“New Brunswick retains the right to modify or adjust this proposal based on what is ultimately approved in other jurisdictions. The expectation is that the Federal Benchmark requirements will be applied in a manner which is fair and consistent across Canada.”
According to Green Party Leader David Coon, the province should stick with its initial plan that has already been approved, rather than trying to change what has already been accepted.
“There’s always a wrinkle with Premier Higgs when it comes to these things,” he said. “What was accepted by the federal government was the proposal that New Brunswick made and that did not include a delay in implementing our responsibilities around carbon pricing.”
The new proposal will have other consequences to fuel prices in the province. A $14-million subsidy sent to distributer Liberty Gas to offset the carbon price on natural gas for home heating will be eliminated. Exemptions for the aviation, marine, manufacturing and forestry industries will be eliminated, while kerosene will bear the carbon tax for the first time.
The province will get to keep a 4.4 cent per litre cut to the provincial gas tax that was introduced in 2020 to soften the impact as the province introduced its own carbon tax to take over from the federal backstop. The federal government has said that similar measures that dilute the “price signal” of the carbon tax will no longer be allowed.
The federal government told the province it needed “confirmation that N.B. is not explicitly allocating revenues from its carbon price on fuels to continue past decreases in fuel taxes that were implemented to offset the carbon price on fuels.”
The province wrote back promising not to explicitly state that carbon tax revenue is being used for that tax cut.
“The historical decreases will continue, but the province will not explicitly refer to those reductions as a carbon recycling measure in communications,” the proposal says.
That tax cut costs about $81 million per year and has been wholly funded by carbon tax revenue in past budgets.
The increases to the carbon tax next year are expected to generate an extra $250-million in revenue for the province. Without the option of blunting price increases at the pump through gas tax reductions, the province has taken to using carbon tax revenue for income tax cuts – something that is likely to continue according to the premier.