Canadian Legislative News

On October 23, Prime Minister Justin Trudeau announced there would be a federal carbon tax system in provinces and territories that have not implemented their own, notably in Ontario, Saskatchewan, Manitoba, and New Brunswick, starting April 2019. Any direct proceeds will be given to residents in these provinces in the form of rebates to offset the costs associated with the new carbon tax. Funds will also go to the provinces’ cities, schools, hospitals, businesses, and indigenous communities. For example, in Ontario, a family of four will get $307, exceeding the anticipated $240 increase in fuel cost after the carbon pricing is implemented. The rebate will grow to $718 when the carbon tax reaches its peak at $50 per ton in 2022.

Other provinces including Quebec, Alberta, British Columbia, Nova Scotia, Prince Edward Island, Newfoundland, and Labrador, have or are in the process of putting in place a system to meet the federal target of $20 a ton by January 1, 2019. Initially, imposing a federal carbon pricing system for provinces was a backup plan for the non-compliant. However, it has become the principal mechanism for nearly half of the Canadian government. Saskatchewan and Manitoba have long been major opponents to the pan-Canadian framework on climate, which included carbon pricing.

The new Progressive Conservative government in Ontario recently scrapped its "Cap and Trade" program, adding its voice to the coalition of provinces opposed to the carbon tax. Saskatchewan Premier Scott Moe has pledged to legally challenge the federal government's right to impose such a tax on provinces. Conservative Party leader Andrew Sheer calls the rebate program an election "gimmick." Alberta is in compliance with the Federal government framework, having implemented its own carbon tax. However, the United Conservative Party, which is favored to win next year's provincial election, has strongly opposed it and vowed to cancel it.

There remains a lot of uncertainty with regard to the fate of carbon taxes in Canada with a looming election in less than a year. The Conservative Party has promised to scrap any form of federal carbon tax. On the other hand, the Liberal government rebate announcement is clearly an indication that it intends to keep its 2015’s promise and to make it an election issue.

For fleet managers, a carbon tax would have an impact on costs. It will be important for NAFA's Canadian counsel will continue to monitor and interpret the carbon pricing mechanism in each jurisdiction.