The City of Whitehorse will pay an estimated $126,000 in carbon tax in 2019, but it’s unclear whether the city will see a rebate on that expenditure.
“At this point it wasn’t 100 per cent clear how the municipalities will fit in or what role they will have,” said Peter O’Blenes, director of infrastructure and operations with the City of Whitehorse.
O’Blenes was speaking during the April 16 standing committees meeting.
“However, it was clear that 2019, Jan. 1, the carbon tax will come into effect. And there is kind of an indirect carbon tax and a direct carbon tax. And the direct carbon tax will start immediately.”
O’Blenes told council the tax in 2019 will be $20 per ton of carbon emissions. By 2022, he said that will rise to $50 a ton, which will bring the annual carbon tax bill for the city to $328,000.
When Coun. Samson Hartland asked if the city would be eligible for any sort of rebate, O’Blenes said that was unknown at this point.
The issue came up in the legislature on April 17, when Yukon Party MLA Stacy Hassard asked if the government would exempt municipalities from the carbon tax.
Premier Sandy Silver said he anticipated having an announcement about municipal rebates at May’s Association of Yukon Communities annual general meeting, being held in Dawson City.
“We will have a rebate system that will be in place for 2019 when carbon pricing comes into effect,” said Silver.
When Hassard asked Silver to commit to giving municipalities back 100 per cent of their carbon tax dollars, John Streicker, minister of community services, responded.
“I did have a conversation with the Association of Yukon Communities in the fall when I talked about carbon pricing and said that we had designed our rebate to be 100 per cent back to Yukoners and Yukon businesses,” Streicker said.
“Following that, in further conversations with them, I invited them to put in a proposal to us, which we have received. I’m pleased that we will be providing an announcement at the Association of Yukon Communities AGM, and I thank them for coming to us.”
In the meantime, Hartland asked O’Blenes how city administration planned to handle the issue of budgeting when the question of a potential rebate hadn’t been answered.
“It sounds like we’re not quite clear how the money may be coming back, so in my view, there is the potential as of today, for an increased cost to the operating budget of the City of Whitehorse that may relate into a potential tax increase to cover said cost,” Hartland said. “How are we budgeting for these impending costs right now?”
O’Blenes said YG was working on it and would be getting back to the municipalities, letting them know how it would work.
He said that, come summer, when administration starts budgeting, the operating department will work with finance to come up with a plan.
Silver continued his assertion that the territory needs to wait for more information from Ottawa before it can decide what the rebate is going to look like.
“We are waiting for these things to be addressed: namely, carbon pricing policy should include revenue recycling to avoid a disproportionate burden to vulnerable people and to Indigenous groups, but also, carbon pricing policies should minimize competitiveness impacts and carbon leakage, particularly for emission-intensive trade-exposed sectors,” he said.
Last week, the territorial government released an analysis of the carbon tax’s impact on the Yukon that was completed by the federal government.
Not knowing what the territorial rebate program is going to look like was a “big hole” in the presentation, said Jonas Smith, executive director of the Klondike Placer Miners’ Association.
The report uses numbers from 2013 to try and project what the economy is going to look like in the future, he said.
“There’s an inherent lag in information which can be expected and therefore excused but it is very likely we are not going to have an analysis if this has had any impact at all until year five so that’s pretty frustrating,” Smith said.
Placer mining is energy-intensive, he said.
“There are not alternatives currently right now and as such the industry itself are already leaders in reducing consumption and improving efficiency. We do everything in our power. Fuel is our single largest expense. If there is an alternative out there we are all over it already.”
He suggested placer miners could be rebated what they spend on the carbon tax, similar to how they currently have their GST remitted.
“Placer miners are GST-exempt. We produce a product that’s price is set by an international market, we can’t pass along costs to our customers, the price is set. As such we collect our receipts and we submit them and we get the GST remitted.”
Silver continued to acknowledge that placer miners need to be considered but again gave few specifics.
“For years now, I have been saying that carbon-pricing mechanism should not penalize those who cannot otherwise change behaviours,” he said.
Silver said there are direct costs and indirect costs when it comes to carbon pricing.
”Our groceries that come up right now and our commodities that come up from our four major hubs, which are Ontario, Quebec, British Columbia and Alberta, already have carbon pricing mechanisms, so you’re already feeling the indirect costs of the carbon pricing mechanism,” he said.
“However, the direct costs that will be felt at the pumps as of January — 100 per cent of that money — 100 per cent — will be given back to Yukoners and Yukon businesses.”
In a statement this morning, the Yukon Party said the price of diesel yesterday in Dawson City was $1.61 per litre.
According to documents provided by the federal government, the carbon tax will increase this by 13.69 cents per litre by 2022.
As a result of this price increase, a placer operation could potentially see an increase on the amount they spend on fuel by over $200,000 per year, the official Opposition says.
“The premier needs to commit today that placer miners will either be exempt from the carbon tax scheme or that every placer miner will get 100 per cent of their money back,” said MLA Scott Kent in the statement.
Contact Amy Kenny at amy.kenny@yukon-news.com and Ashley Joannou at ashleyj@yukon-news.com