Private sector largely views carbon tax with suspicion

There’s been a lot of rhetoric and posturing, this election campaign, about the likelihood of a carbon tax in the Yukon.

There’s been a lot of rhetoric and posturing, this election campaign, about the likelihood of a carbon tax in the Yukon.

The party leaders have staked out battle lines on the issue from the start. Yukon Party Leader Darrell Pasloski insists the Yukon Party will oppose a carbon tax, but has refused to explain how. Liberal Leader Sandy Silver says his government would return all carbon tax revenue to Yukoners, but has been vague on the details. NDP Leader Liz Hanson says her party would split the revenue between rebates for low-income Yukoners and investments in renewable energy, and is using the issue to drive home her argument that the Yukon Party can’t get along with other levels of government.

But in speaking with Yukon business owners, miners and residents, a more thoughtful, nuanced debate about the merits and drawbacks of a carbon tax emerges.

One of Pasloski’s favourite lines in his war of words against a carbon tax is that it will “make everything more expensive.”

Several people in Yukon’s business community believe that is true, though the impacts on their businesses would vary.

Air North president Joe Sparling said the airline will spend over $20 million on fuel this year, and that amount would increase under a carbon tax.

“Without a doubt, it’s a tax that would have to be passed on to consumers,” he said.

He worries that the added cost of airfare would make people travel less. He said there’s not much Air North can do to reduce its fuel consumption, and said the airline wastes more fuel “flying empty seats around” than it “could ever hope to recover through the use of a carbon tax.”

Ben Ryan, an owner/operator at Heat Yukon, said his company would also pass the added cost of heating fuel on to its customers. But he doesn’t think he’d be affected by a carbon tax in the short term, because he believes it’s unlikely people will drastically reduce their heating fuel consumption.

“Bottom line, we’re not really for or against it per se, but our view is that it’s not necessarily likely to deter heating fuel consumption,” he said.

Over the long term, he said, his company might start to take a hit as more people switch to electric heating or make their homes more energy efficient.

Yukon developers also say they’re likely to see prices go up. Ben Asquith, CEO of the Da Daghay Development Corporation, the business arm of the Ta’an Kwach’an Council, said the corporation would likely have to pay more for materials and on heating fuel for its various housing developments.

Da Daghay is currently building a 42-unit affordable housing complex in Whistle Bend. Asquith said it’s already hard enough for the private sector to build affordable housing in the Yukon. He said the corporation would have to decide whether to pass the extra cost on to tenants and make the apartments less affordable or to absorb the cost and reduce its profit margins.

“We’re on a very tight budget,” he said. “It’s going to be difficult going forward.”

Northern Vision Development CEO Rich Thompson voiced similar concerns, saying his restaurants would have to pay more for food and his hotels would pay more for heat.

He said he believes “responsible carbon pricing makes sense,” but he isn’t sure Yukoners can reduce their fossil-fuel consumption all that much, which is what a carbon tax is supposed to achieve.

“There seems to be a real challenge for northern Canadians to change their behaviour enough to have an impact,” he said. “I think our conclusion is it will make things more difficult.”

Still, not all Yukon business owners are dead-set against a carbon price.

Leona Commons, owner of Riverside Grocery in Whitehorse, said her prices would likely go up, since “everything comes to town on a truck.”

She said she would probably pass some of that cost on to customers, but she might have to swallow some of it to stay competitive with larger grocery stores in town.

But she believes a carbon tax is inevitable, and said she doesn’t have a fixed opinion about it.

“I believe in climate change, and I believe we have to do something,” she said.

Price increases are also just one side of the carbon tax equation. A revenue-neutral carbon tax, which is what the Liberals are proposing, would return all of the tax revenue to Yukoners. The idea is that those who pollute less would make back more than they pay in carbon tax, and those who pollute more would have an incentive to cut their emissions.

The Liberals say they would reimburse Yukon individuals and businesses using rebate cheques, though they’ve been hazy on the details.

The chief knock against this plan comes from those who say that heavy polluters in the territory can’t easily change their behaviour. Placer miners, in particular, have claimed they will be the victims of a carbon tax.

“It would go right to our bottom line. If the price of fuel increased, then it would just be a reduction in the profits that we make,” said Mike McDougall, a second-generation placer miner and the president of the Klondike Placer Miners’ Association.

Unlike grocery stores and airlines, McDougall said, placer miners can’t pass on the tax to their customers, because the price of gold is fixed.

He said his operation uses 150,000 litres of fuel in a year, and he can’t cut that consumption very quickly, even though he’s trying to buy more fuel-efficient equipment.

“A tax like this comes as a mailed fist rather than a velvet glove,” he said.

But larger mining operations in the Yukon face a different reality. Buddy Crill, Goldcorp’s general manager for the Coffee project near Dawson City, said the mining giant believes that carbon pricing is “part of our future.”

Goldcorp already operates in Quebec, which has a cap-and-trade policy in place. Crill said the company is able to foot the upfront cost of renewable energy projects to help power its operations.

“Goldcorp is in a little different position than (local businesses),” he said. “We’re able to handle that better.”

This week, Pasloski said a carbon tax could cost families an extra $2,600 a year. That number comes from an estimate from the Canadian Taxpayers Federation.

But Forest Pearson, a local geological engineer, says those numbers don’t add up, in part because the federation just divided the total cost of a carbon tax by the total population. That doesn’t make sense, he argues, because it assumes that everyone is emitting the same amount when big polluters actually account for a large portion of emissions.

He also disputes claims that a carbon tax will drastically increase the cost of gas or trucking goods into the Yukon. He estimates the additional cost of trucking material would equal 0.44 to 3.3 cents per kilogram, and the price at the pump would go up by 10 cents a litre with a $50-per-tonne carbon tax.

“At 10 cents a litre, you can make that up by driving the (speed) limit,” he said.

Pearson will be debating a representative from the Canadian Taxpayers Federation at a luncheon put on by the Yukon Chamber of Commerce next Thursday.

He believes the Yukon has lots of landmass for developing renewable energy, and access to lots of federal infrastructure money. He also said most new housing in the Yukon is built with electric heating.

He thinks the carbon tax will drive development in the territory.

“It’s actually really good for our economy,” he said. “What part of basic economics don’t they understand?”

Contact Maura Forrest at maura.forrest@yukon-news.com

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