Federal carbon tax and implications for propane industry
The new Alberta government has passed Bill 1 - the Carbon Tax Repeal Act, which discontinues the Alberta carbon tax and rolls back climate change programs funded by the tax. Alberta will introduce a tax on large industrial polluters, similar to the version of the carbon tax Alberta had prior to the NDP government; it is expected in Fall 2019. Federal Environment and Climate Change Minister Catherine McKenna has announced that the federal backstop carbon tax will be applied in Alberta but has not yet communicated an implementation date.
Premier Jason Kenney has indicated that Alberta will join the government of Saskatchewan in their appeal on the constitutionality of carbon taxation and has instructed Attorney General Doug Schweitzer to prepare a legal challenge on Ottawa’s jurisdictional ability to impose a tax on filling up gas tanks and heating homes.
The federal carbon tax is applied under the Greenhouse Gas Pollution Pricing Act; it sets a federal standard for taxation to reduce carbon pollution. Provinces and territories that meet the federal standard with their own carbon pollution pricing use their own systems, as Alberta had under the NDP; those without an approved plan are faced with the federal “backstop” carbon price.
The federal carbon tax has implications for CPA members as propane is not an exempt fuel. The federal carbon tax increases the price of gasoline, light fuel oil (clear and coloured diesel), natural gas, propane and non-market natural gas, and it will be charged on fuels used for air, marine, rail and road transportation.
Farmers will be eligible for a carbon tax exemption on gasoline and diesel for tractors, trucks and machinery used on the farm. To qualify for the exemption, farmers must complete a Fuel Charge Exemption Certificate for Farmers (Form L402) available on the Canada Revenue Agency website.
The CPA is advocating for a full exemption on all farm fuels, including propane. The Association has met with the Environment Ministry to make its case and with the department of Finance to indicate its disappointment. The CPA understands the need to keep input costs for farmers reasonable but do not understand why the federal government would choose to exempt gas and diesel, which they are trying to reduce the use of, with no consideration of promoting lower emission fuels like propane.
Green house operators will see partial relief of the carbon tax (80%) applied to natural gas and propane exclusively for use in the operation of a commercial greenhouse for growing any plants. The carbon tax relief will be provided upfront through exemption certificates, making only 20% of the fuel charge applicable on natural gas and propane delivered by a registered distributor to an eligible greenhouse operator. The CPA has requested a full 100% exemption for greenhouse operations.
Business owners and operators across the country continue to voice questions and concerns regarding the carbon tax, its administration and enforcement. The CPA is monitoring this issue and is working with its agriculture sector partners for a full exemption of propane. Members will be kept informed of any substantive changes to the act’s requirements.
For further information on the points outlined above, please contact Darren Cunningham, Government Relations Director - West.
*Photo: Ed Kaiser/Postmedia