The GNWT’s announcement of a pause in carbon taxes on home heating oil was one that came as no surprise to the MP for the NWT, but he points out that the territorial government stands to lose a source of revenue.
Finance Minister Caroline Wawzonek stated on Tuesday evening that the tax will be suspended as of April 1 for those who use home heating oil and it will be in effect until March 31, 2027. Those who use propane and natural gas for heating will still have to pay the carbon tax.
“(The suspension) was an option that was available to the NWT since the prime minister announced the pause back in October,” Michael McLeod told NNSL Media on Thursday afternoon. “I’m not surprised by it based on the comments made by the minister and the premier. The option was there to do it.”
But McLeod thinks there was some confusion around the way the price was rolled out in terms of what appeared on customers’ bills as well as rebates.
“The pricing on heating fuel wasn’t handled very well,” he said. “There was confusion because I think not a lot of people knew what it was for and people were maybe expecting cheques from Revenue Canada stamped ‘rebate’ on it. It ended up that people were upset because they maybe didn’t get a rebate, or less of a rebate, and blamed the pricing for the increase in their bills.”
Under federal legislation, residents of some provinces and territories are exempt from paying carbon tax on home heating oil. However, not all provinces and territories follow the federal system for carbon taxes. Some, like the NWT, choose to use an independent system. That means that the federal exemption didn’t automatically apply in the territory, and residents would continue to pay the tax until the territorial government changed its rules.
In a previous interview with NNSL Media, Premier R.J. Simpson said the carbon tax was “just not fair for the North” and felt the NWT should be totally exempt from paying it at all.
The previous legislative assembly passed a bill to take over collecting the carbon tax and distributing it under its own means. If it didn’t do that by April 1, 2023, the federal backstop would have come into effect, meaning Ottawa would have handled all rebates and tax administration.
The pause in collecting the tax means the GNWT will be starving itself of money, McLeod added.
“If you cancel the tax, you cancel the revenue,” he said. “They’re in a cash crunch right now and now that they’ve stopped it, they’re going to lose about $16 million this year and about $18 million next year, if I remember correctly. Given the reality of their situation, I’m not sure how they’ll replace that lost revenue.”
McLeod said there is a need to explore other energy options and the opportunity is there for the NWT to be at the forefront of trying new ideas.
“The challenge of warming temperatures is already here and it’s a problem for all of us,” he said. “The next election may be about carbon, but those of us who are 60 and over will see floods and worse air quality. My fear is for the kids who are coming after us because they’ll feel the full effect if we don’t do something now. Scientists have been waving the red flag in our faces.”