My perspective - A taxing problem
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- Published on Friday, March 13, 2020
By Kate Jackman-Atkinson
Neepawa Banner & Press
Last week, the provincial government announced a new tax, a $25 per tonne Green Levy. They also announced some tax relief in the form of a 1 per cent reduction in the PST. Both changes will come into effect July 1 and I鈥檒l be honest, the whole proposal has me confused.
On the surface, this looks like the same proposal the province came up with in late 2017, when they announced the Made In 水果视频 Climate Plan. The federal government axed this plan, which was a flat levy of $25 per tonne, saying it was not enough. The federal backstop program, which ended up being applied to 水果视频 residents, started with a $10 per tonne levy in 2018, rising by $10 per tonne each year, until reaching $50 per tonne in 2022.
Last week鈥檚 announcement gave no indication that the federal government had changed its mind and would now accept this level of taxation. In the announcement, 水果视频 premier Brian Pallister seemed to be spinning this as a way for the federal Liberals to curry favour with the Prairies, saying, 鈥溗悠� has offered to be a bridge between east and west on climate and carbon and that offer still stands.鈥�
I鈥檓 still confused: why this plan, why now?
By the response following the announcement, while many groups had concerns with the federal carbon tax, a Made in 水果视频 plan wasn鈥檛 necessarily what they were looking for in a solution. The general farm group Keystone Agricultural Producers (KAP) has spent much of the last year lobbying for a carbon tax exemption for fuels used in agricultural operations, in particular, barn heating and grain drying. In an official response to the announcement, KAP expressed support for a plan that would offer this exemption, but it was measured.
The Canadian Federation of Independent Business (CFIB) was supportive of the PST reduction. The Canadian Taxpayers Federation criticized the provincial government for its about-face on a carbon tax. Pallister had originally said he would fight Ottawa on the tax, but last week鈥檚 announcement came as the anti-carbon tax movement was gaining strength, following an Alberta Court of Appeals decision that the federal plan was unconstitutional.
Perhaps there are backroom discussions and Ottawa is willing to revisit its decision, but there seems to be no indication that鈥檚 the case. Instead, what seems likely to happen is that the federal backstop will top up the 水果视频 levy. This means that in 2020, 水果视频ns will likely pay $25 per tonne to the provincial government and another $5 per tonne to the federal government, to make up the $30 per tonne total the feds have targeted for 2020. It鈥檚 no wonder KAP noted concerns over an unclear tax structure.
While the provincial levy is expected to raise about $285 million, the PST reduction is expected to cost the province $325 million. Not only will the tax cut result in a net decrease in government income, it鈥檚 not clear it will help those who most need it. The federal government has paired their carbon tax with targeted rebates to lower income Canadians and those who live in rural and remove areas.
A PST reduction will have no such effect. Because it is a consumption-based tax, those who spend more money will see a greater reduction in their tax bills. This means that lower income 水果视频ns, who spend less money because they have less to spend, won鈥檛 see much for savings. It鈥檚 hard to imagine that the federal government will continue to provide additional tax breaks to rural 水果视频ns when they aren鈥檛 funding the program.
As the provincial government uses the need to rein in spending as justification for cuts to services, adding another government department to administer the levy, as well as funding a new tax cut, creates more questions than answers.
