The Yukon government has released its proposed plan for issuing carbon tax rebates and the first cheques for individuals are slated to be in the mail in October.
The plan, which Yukoners can comment on until Feb. 4, lays out how individuals, businesses, First Nations, municipalities and the mining sector could be rebated once the federal tax comes into effect July 1.
“Yukoners take action every day to combat the effects of climate change,” Premier Sandy Silver said Jan. 17. “We recycle, we consume less, we rideshare and we reuse, but we know that all of our actions combined are not enough.”
Starting in July, each tonne of carbon will be taxed by $20. This number will climb incrementally by $10 until it hits $50 by 2022. The levy will plateau afterwards.
In the first year, it’s projected that the federal government will gather $7.8 million from the Yukon. In 2023, this figure will have ballooned to $26 million, according to the Yukon government.
The territorial Liberals have promised to return that money to Yukoners and Yukon businesses without growing government.
“Overall emissions in the Yukon will be reduced year over year,” Silver said, adding that the federal government projects a decrease of 6.8 kilotonnes of emissions within the first year when compared to the status quo.
Meanwhile, the opposition is accusing the Liberals of misleading the public and creating a plan without any evidence that it will work in reducing carbon emissions.
Every Yukoner who fills out a tax return will get a $43 cheque this October. A second cheque, for the same amount, will be sent out in April 2020.
The $86 between October and April is $2 more than what the average Yukoner will spend on the carbon tax, according to the government.
Starting in July 2020, rebates would be issued four times per year.
The total annual rebate for individuals living in Whitehorse will climb to $284 by 2023.
Residents outside of Whitehorse will get a 10 per cent supplement to their cheques, but that won’t start until the first full year of the program.
A family of four living in the communities would get a $1,249 rebate in 2023, according to the government. That’s $312.40 per person, including the supplement.
For comparison, the government estimates residents will pay an average of $187 in carbon tax that year.
Rebates would be issued by the Canada Revenue Agency and wired electronically or come in the mail as a cheque.
While individuals will be taxed the most, this will be offset by the rebate they receive, which is larger than other categories.
In total, by 2023, Yukoners would have paid roughly $7.6 million but get back $11.7 million, according to the government.
“The largest part of our economy is the people in this territory, hence, at the end of the day, they’re paying the highest levy,” Katherine White, deputy minister of finance, said during a technical briefing.
Carbon output is proportional to income, meaning that people with lower incomes don’t produce as much. As a result, they are taxed less, said Clarke LaPrairie, assistant deputy minister of economics, fiscal policy and statistics.
In 2023, when individuals will be getting $284 in cheques, the lowest one-third of income earners would pay $99 in a carbon tax, he said, whereas the third with the highest incomes would pay $261.
“The lowest one-third of Yukoners have in absolute terms the lowest carbon bill so they will be disproportionately benefited from this exercise,” LaPrairie said, referring to the rebate.
Instead of receiving rebates four times annually like individuals, businesses will receive theirs as a refundable income tax credit at the end of the year.
In 2019, businesses would be taxed about $1.6 million; the rebate in this instance is roughly $1.9 million, the government says.
By 2023, when carbon pricing is at $50 per tonne of emissions, businesses would be taxed roughly $5.4 million, according to the plan. About $6.4 million would be rebated.
There are incentives from transitioning away from fossil fuels. For instance, $57.46 per $1,000 in assets will be tacked onto the rebate in 2023 (roughly $6.4 million) by way of a “Super Green Credit,” a program that awards businesses for investing in renewable energy sources – electric vehicles or solar panels, for example.
There are building and equipment benefits, too, if a business chooses to invest in those areas.
Federal exemptions for the Yukon include the aviation sector and diesel-powered electricity in rural zones.
Truckers don’t have an exemption, however, a point that Brad Cathers, Yukon Party MLA for Lake Laberge, said is an instance of “picking winners and losers.”
“The structure of this whole program is not fair to the trucking sector, it’s not fair to small businesses, it’s not fair to NGOs …” he said.
Cathers said that Silver’s claim that all Yukoners would get 100 per cent of their money back via the rebate is “completely misleading.”
“Non-government organizations will not get a rebate,” he said, noting that it will only increase their costs of doing business.
“Small businesses, as well, will have to pay 100 per cent of the carbon tax and wait until to end of the year to claim a tax credit. That will mean the government will keep their money for the entire year, and they’ll be waiting to get some of it back.”
Placer and quartz mining
To ensure these industries remain competitive internationally, rebates will mirror carbon taxation by 100 per cent.
“Quartz mines not subject to the federal output-based pricing system (OBPS) during development, operations and reclamation will receive a rebate for 100 per cent on the first 6 kilotonnes (kt) and 50 per cent on all emissions between 6-10 kt,” according to the plan.
Industry owners of these types would submit receipts for purchases where the tax was applied, it says.
Cathers said this strategy would only increase the amount of paperwork, requiring additional administrative labour in the sector and for the Yukon government.
“It’s an ineffective and costly approach to it,” he said.
The mines would apply to the Yukon government on Jan. 1, 2020 in order to receive a rebate for the year before.
“Operators can then apply to the Government of Yukon any time after Jan. 1 in order to claim expenses for the previous year,” the plan says.
Large-scale mine operations will be eligible for the quartz mining rebate during development and reclamation phases, it says.
“Once they begin production, these mines will be subject to the OBPS.”
First Nations and municipalities
In 2019, First Nations would spend $40,000 on the tax, receiving double that as a rebate.
The rebates will be distributed to First Nations on Mar. 31, 2020, covering the preceding year.
Municipalities would be taxed $200,000 in 2019 and rebated $230,000.
Like First Nations, municipalities would receive their rebate, on April 1, 2020.
Subsequent payments would be on an annual basis.
“Rebates to Yukon First Nations governments and municipal governments will be developed in 2019, following further discussions with them,” the plan says.
Contact Julien Gignac at email@example.com