A province can do whatever it likes with fuel taxes, so long as it doesn’t come right out and say it is reducing those taxes to blunt the impact of the federal fuel charge
The federal Liberals are leaving the door open for the provinces to cut their fuel taxes without fear of Ottawa neutralizing that reduction with a higher federal fuel charge under carbon pricing.
There was ample precedent for Saskatchewan’s proposal: Newfoundland and Labrador, New Brunswick and Prince Edward Island have, to varying degrees, been allowed to cut taxes or otherwise exempt their citizens from the bite of the federal fuel charge. One difference: Those reductions came years ago, when the Liberals were trying to assemble a critical mass of support for their national carbon pricing strategy.
But that wish will not translate into action. In a statement, Mr. Guilbeault’s department said carbon pricing rules do not extend to “non-carbon price related taxation regimes,” and changes for “other purposes” are not considered when determining whether a province is adhering to the federal benchmark.
But there are a couple of problems with that policy. The most obvious is that Mr. Guilbeault is absolutely correct – it’s the net increase in taxes that matter. If the provinces offset the federal fuel charge, it is rendered impotent.
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