The Carbon Tax – known by supporters as the Price on Pollution – doesn’t arrive to Nova Scotia and the other Atlantic provinces until Canada Day, but the silly political posturing is already well under way. 

I had to do a double take last week when Liberal Leader Zach Churchill, accompanied by most of his caucus, called in the media to say bad things about the tax while trying to pin the responsibility for the impending calamity on Tim Houston and the PCs.   

Considering that it’s the federal Liberals who are bringing in the measure one might expect the provincial Liberals to support it, or at least keep quiet. But no, Churchill and his crew decided to pursue the fantasy that if they were still in power they would have negotiated a deal allowing Nova Scotians to continue paying a tiny fraction of the tax other Canadians pay on fossil fuels. 

Readers may recall that Churchill’s former boss, Stephen McNeil, was dead set against any measure that would raise taxes on fossil fuels, especially gasoline. So in a move to keep McNeil and the other then-Liberal Premiers in Atlantic Canada from joining the right-wing anti-tax coalition led by Jason Kenny, Scott Moe, Doug Ford et al, Justin Trudeau let them design their own schemes.

Some imposed a carbon tax, then undercut the impact by lowering the provincial gas tax. But Nova Scotia tried to get fancy, setting up a cap-and-trade scheme that seems to have consisted  mostly of a shell game involving the provincial government and Nova Scotia Power, and a token levy on fossil fuel distributors that added all of 1.1 cents a litre to the price of gas. The sweetheart deal had a 2022 expiry date. With most other Canadians paying a 14.3-cent a litre carbon tax at the gas pumps as of April 1, chances of it being renewed at anything close to those terms ranged from very slim to none, regardless of what party was in power in Nova Scotia. But then, as discussions about a replacement deal were beginning, the government changed from Liberal to PC.

Long time opposition

On a scale of one to ten, if the Liberals registered a nine in opposition to a carbon tax, the PCs were at 9.5. Although Houston tries to distance his party from the carbon-tax-hating federal party and the antics of various conservative-hued Premiers across the country, the provincial PCs have their own track record of opposition to a carbon tax. It goes back to 2007 and 2008 when a revenue neutral carbon tax was first introduced in British Columbia. The NDP’s Graham Steele, then in opposition, made a speech in the Nova Scotia legislature in support of the B.C. carbon tax. The Conservatives responded with an attack ad. Years later, as leader of the opposition, Houston tried to make hay political over the minuscule 1.1-cent impact on gas prices resulting from the McNeil government’s risible cap-and-trade scheme.

With that background, Houston putting any meaningful price on carbon was about as likely as the greenish new Environment Minister Stephen Guilbeault agreeing to renew the politically convenient cap-and-trade scam. So Houston did what conservative premiers in other provinces have done – he acquiesced to the federal carbon tax while making sure their electorate would know that the tax was the doing of the Trudeau Liberals. 

That may be politically smart for the Houston Progressive Conservatives and those distant-cousin conservatives in Ottawa who rail against the carbon tax on a daily basis. The Churchill Liberal positioning is harder to grasp.  When Churchill repeated the claim that the PC government missed an opportunity to negotiate a better deal with the feds, Houston responded with a putdown.

“I’ve heard the position that Zach is advancing and I have to say I don’t actually know if he is outright lying or if he just doesn’t understand.” Ouch.

Perhaps it’s a bit of both: Churchill is obfuscating to cover-up a boondoggle from the past while failing to understand that it would be better to let bygones be bygones and prepare to join his federal Liberal counterparts in defence of the “price on pollution.”  

Enter the PBO

There has been all kinds of flak thrown up about the issue since the Trudeau government decided back in 2016 to put a national price on carbon. Many, including some environmentalists, question its effectiveness in reducing emissions. The jury’s still out on that. Others, mostly in the oil-producing provinces, see the tax as an all-out attack on the fossil fuel industry – despite the fact that oil and gas production continue to increase. But the telling argument, the bread and butter one we hear constantly, is that the tax will just make life miserable – or worse – for ordinary folks. In an article in the Chronicle-Herald last weekend Tim Houston is quoted twice saying the tax would have a “devastating impact” on Nova Scotians in general and “many families that are struggling.” 

Presumably Houston (along with the Conservatives in Parliament that he hardly knows) is finding support for his doomsday scenario from a couple of recent reports from the Parliamentary Budget Office (PBO). Those reports cast some doubt on the Trudeau government’s claim that because of rebates – the feds call it the Climate Action Initiative – 80 per cent of Canadians covered by the federal carbon tax would get more back in rebates than they paid through higher taxes. 

The PBO essentially agreed with that claim, finding that for all provinces and most income groups, reimbursements offset both the direct and indirect impact of the tax. The estimated annual average net benefit to households by the time the tax reaches $170 a tonne in  2030-31 would range from a high of $776 in Alberta to a low of only $33 in Nova Scotia. 

The main reason for the big difference between Nova Scotia’s average of $33 and Alberta’s $776 is that energy exporting Provinces will have some of the tax paid by importers of their products whereas in Nova Scotia most of the carbon tax will be paid by people who live here. Nevertheless, despite the modest overall net benefit for Nova Scotians, the two lowest income quintiles – the “struggling families” Houston champions when it suits him – do okay. PBO projects a net benefit of $353 to the lowest 20 per cent, $278 to the next lowest.

But the PBO added another consideration that has muddied the waters and given carbon tax opponents grounds to attack Liberal claims that most people will be better off. That additional factor is the estimated overall economic impact of the tax, especially on the fossil fuel business. When lower employment and profits from fossil fuel production are taken into account the PBO projects (through some econometric alchemy) that by 2030 the carbon tax may cost the average Nova Scotia household $1,513 a year. In Alberta, where the economic impact would be greatest, households are projected to be down an average of $2,773 from where they would be if there were no carbon tax. 

Here come the cheques

Against that far off theoretical scenario – $1,513 a year that may be the case seven years from now – the federal government has a pretty good answer in the here and now. Rebate cheques are supposed to start landing in tax filers’ bank accounts or mail boxes two weeks after the tax comes into effect on July 1. The rebates – actually (P)reimbursements – will be worth $279 for a family of four. A similar amount is supposed to arrive in October and early January. That’s nearly $900 over the next six months to offset a per-litre tax increase of 14.3 cents (plus GST) in carbon tax. 

By my crude math, someone would need to put 50 litres in the tank three times a week  between July 1, 2023 and April 1, 2024 before they exhausted the rebates. Looking at just the summer months, the $279 (P)reimbursement that’s coming soon will enable a family of four driving a 10k/litre gas guzzler to enjoy 18,000 kilometres of happy motoring before the carbon tax starts to bite. Devastating, Mr. Premier? Maybe to the environment.

The carbon tax is far from perfect. As the summer driving example illustrates, it is not likely to bring about much in the way of immediate reductions in carbon emissions.The impact is supposed to be long term, a signal to consumers and businesses that fossil fuel prices will keep going up so they should switch to other energy sources. But we will need other regulatory measures to significantly cut carbon emissions. And while it’s good that the rebates protect vulnerable consumers, will the tax actually convince enough people to give up the gas guzzling SUVs and light trucks for which they already pay a premium price?  

Lastly, the existing design is perverse. It appears that my family of two will be in receipt of a $186 rebate next month. Our only fossil fuel purchase until the next rebate arrives in October will be gas for the car. Based on our anticipated driving plans over the summer – about 100 litres a month – we’re ahead of the game by some $140. Maybe we could celebrate by going for a drive.

It would be better if rebates could be targeted to someone who logs a lot of road mileage because they have no choice but to drive great distances for work, or to those who are stuck heating their homes with furnace oil. Improving the rebate design to help the people who need it most was an option. But the Houston government, increasingly at odds with the Trudeau Liberals on several fronts, chose instead to focus on alarmist finger-pointing. Millions of dollars in rebate cheques to Nova Scotians over the next six months will make their scare-mongering more difficult, and may even cause the PC government to rethink its strategy.  As for Zach Churchill and the provincial Liberals, silence may be the best option.