The reaction by the heads of some of the territory’s major associations and chambers to the Yukon government’s proposed carbon tax rebate plan is a mixed bag.
There’s a similar thread between some of them, however: questions that persist, trepidation when it comes to paying the tax upfront and hope that once the rebate flows back it will be used to lower their carbon footprints further, thus reducing the amount of money they have to provide in the long run.
Fine-tuning aside, the plan seemingly heads in the right direction, said Peter Turner, president of the Yukon Chamber of Commerce.
The plan, released on Jan. 17, has yet to channel through the public comment period, which closes on Feb 4.
In 2019, businesses will be taxed about $1.6 million and rebated roughly $1.9 million, according to the government.
“There is a connection between the scale of the rebate and the carbon intensity of the business, which is great, because, let’s face it, an office full of lawyers doesn’t put out as much carbon as perhaps a fleet of bulldozers,” Turner said, noting that a low-carbon stakeholder committee, established about one year ago, has made recommendations to the government, which appear to have been acted on.
For years the business community has wanted incentives to transition towards greener technologies, he said, adding that the plan makes good on this by providing greater returns on investment for those who do.
The Yukon’s incentive is called the Super Green Credit. It provides more of a rebate for businesses that invest in renewable energy sources like electric vehicles or solar panels.
“I’m actually encouraged by the Super Green Credit element of the business rebate, because I think that starts to take us in that direction,” Turner said. “We should be at the cutting edge of initiating those efforts.”
Unlike individuals, who would be rebated four times a year starting in 2020, businesses will receive theirs as a refundable income tax credit at the end of the year.
Turner called getting rebated once a year “a little onerous.”
“It is an incremental burden on the business community,” he said, noting that costs will be absorbed until the rebate arrives.
This is tempered however, since there will be less bureaucracy because the government is only rebating once a year, Turner said.
Asked if he thinks that temporary burden could harm businesses, he said it’s likely a small enough percentage of their operating costs that they can bear it.
“If there are negative impacts, northern communities in the three territories will certainly be the canary in the coal mine. They’ll be the first to register those impacts,” Turner said.
“We’ve definitely seen an evolution in thinking on the rebate structure for the business community over the last year” on the part of the Yukon government, he continued, noting that the low carbon stakeholders committee will continue to monitor the plan as it enters the next fiscal year.
The News approached the Yukon Chamber of Mines for comment about the plan, but executive director Samson Hartland declined, saying that it’s currently consulting with its membership. He said that a formal response will likely be published before the closure of the public comment period.
Mike McDougall, president of the Klondike Placer Miners’ Association, told the News the Liberal plan mirrors expectations.
Placer and quartz minings operations will get a 100 per cent rebate.
There continues to be some uncertainty, though.
“What we’re still waiting to hear is what will qualify you as a placer miner,” he said.
The association has suggested criteria to the Yukon government that it has yet to accept or reject, McDougall said.
“You really need to be somebody who’s actually using fuel in the production of gold to qualify for a rebate,” he said.
The suggested criteria includes having a water license, a government registered fuel tax number and ownership of claims.
“As the department explained at the technical briefing, there are still some specific details which remain to be developed and we will make that information available when it’s finalized,” said Eric Clement from the Yukon Department of Finance. “We continue to have discussions with the industry, but there aren’t too many specific details to announce at this time.”
The challenge for placer miners, McDougall said, is that they can’t pass on costs to consumers. That’s because gold is beholden to international markets.
“We can’t control the price and, therefore, we can’t manage the additional costs without it affecting our bottom lines,” he said.
The carbon tax takes money out of placer miners’ pockets, he continued, which could have an impact on capital expenditures.
“As the tax increases, there’s going to be a large number of dollars held by government to be rebated back and why not be able to turn that money into important things like employing people, making local purchases,” McDougall said.
The plan acknowledges this issue, providing a 100 per cent rebate for placer miners.
Owners would submit receipts for purchases where taxes were applied.
Miners would apply to the Yukon government on Jan. 1, 2020 in order to receive a rebate for the year before.
Placer mining requires a lot of fuel, McDougall said, noting that it accounts for roughly 30 per cent of expenses.
Gasoline and diesel are set to increase, according to the plan, by roughly 6.6 cents and eight cents, respectively, from 2019 to 2022.
This has spurred placer miners to make adjustments ahead of the curve, McDougall said, and those changes that will continue.
“As an industry, and as an industry association, we’ve committed, and many of our members already have, to looking at all kinds of things which will reduce our fuel use, because fuel is one of our major costs,” he said, noting that many members currently use fuel-efficient machinery and processes.
Some remote camps, for instance, use technologies including solar panels, battery backups and micro hydro “to try to reduce costs,” McDougall said.
“Really, in the end, that’s the most important and most useful way that this lower carbon economy is gonna come is when people see a benefit, right, if you can reduce the costs without artificially supporting it.”
Tara Wheeler, president of the Association of Yukon Communities, said there are many blanks in terms of how municipalities will be rebated.
Municipalities are expected to pay about 2.5 per cent of the Yukon’s total tax, but get back a roughly three per cent rebate.
They would be taxed $200,000 in 2019 and rebated $230,000 in the spring of 2020, for instance.
How the three per cent rebate will be divvied up and when municipalities will get it are unknowns, Wheeler said.
“We don’t know numbers,” she said. “We don’t know what it might cost and what we would get back, so budgeting, that’s going to be difficult.”
While the plan looks good on paper on a long-term basis, it’s the near future where issues lie, Wheeler said.
“I’m hoping if we reinvest (the rebates) into energy savings, it will actually save us money. It’s a wish. I don’t know if it’ll actually work,” she said.
“A lot of the municipalities would like to see that, but we’re pretty strapped for cash.”
Contact Julien Gignac at email@example.com