Every penny of the province's carbon tax will eventually end up in Manitobans' pockets through reduced taxes, including the Progressive Conservative government’s election promise to reduce the PST to seven per cent in 2020.
That’s a four-year promise, Finance Minister Cameron Friesen declared Monday. "We need to give Manitobans their money back."
The carbon tax - set at $25 per tonne of emissions - takes effect Sept. 1, and should generate $143 million for the remainder of the fiscal year and $248 million for the full budget year of 2019-20. The province said the carbon tax should lead to reduced emissions, so it is anticipating revenue from the tax to drop an estimated 4.7 per cent to $240 million annually by 2022.
The revenue from carbon tax will offset the $149.3-million hit the province is taking on the personal tax cut announced Monday. The remaining revenue from the carbon tax, which will be close to $100 million annually, will be applied to future additional tax savings government officials said would include the PST reduction from its current eight per cent.
"It’s being recycled back to householders," said one senior bureaucrat, speaking on the condition of anonymity.
"Will it contribute to PST reduction? Yes," said another senior official.
Despite the Tories' vow Manitoba taxpayers will benefit long-term from the carbon tax plan, they'll also take a hit to the pocketbook.
The green plan levies a carbon tax of 5.32 cents a litre on gasoline, 6.71 cents a litre on diesel, 3.87 cents a litre on propane, and 4.74 cents a cubic metre on natural gas.
Manitobans who drive vehicles and heat with natural gas can expect to pay an estimated $195 more a year for a single person, up to $300 for a couple with children.
Unlike the federal carbon tax plan that starts at $10 a tonne and increases each year, Manitoba has adopted a flat rate.
"All carbon tax revenues received over four years will be returned to Manitobans through tax reductions," said Friesen.
He acknowledged the savings won’t really start until next year, however Ottawa set the date to implement carbon taxes.
The minister said he is confident emissions will decline as a result of the carbon tax. "We believe that the price at the pump will have some effect," Friesen said. "We’re talking about fundamental societal shifts."
The federal government praised Manitoba's approach, adding it is left to discretion of provinces on how to use carbon tax revenue.
"There are many different real-world examples of how carbon pricing revenues can be used – they can help people save money on energy bills, fund climate solutions like public transit and energy efficiency programs, or cut taxes and provide rebates to households and businesses," said Caroline Theriault, spokeswoman for federal Environment Minister Catherine McKenna, in a statement.
"Canadians know that pollution isn’t free, so putting a price on carbon pollution – as Manitoba has done – is an essential tool to discourage choices that result in pollution and reward cleaner energy choices."
The provincial government is exempting the agricultural industry from paying carbon tax on emissions from soil and animals, reasoning agriculture’s far greater proportion to Manitoba's economy (compared to other provinces with different rates) would make the sector vulnerable in competitive trade.
As well, agriculture consumes 90 per cent of the so-called marked fuel the province has exempted from carbon tax; fishing, forestry and mining consume the rest. The exemption covers fuel used for operations such as combines and tractors.
While the government won’t direct carbon taxes to specific environmental projects, it’s pumping $102 million in endowment funds into a trust managed by the Winnipeg Foundation to spend on the province’s climate change priorities, especially nature conservation.
Because it’s a trust, future governments can’t dismantle it, Friesen said. "Our government recognizes the right of our generation to develop and use our natural resources, but not at the expense of those who will come after us."
He wouldn’t speculate if there’ll be any future government contributions to the endowment fund.
The province will soon introduce legislation to establish carbon taxes on gas, liquid and solid fuels intended for combustion.
But still to come is a separate "output-based pricing system" for energy-intensive and trade-exposed industries emitting more than 50,000 tonnes annually of carbon dioxide. That will come sometime after 2018, following consultation with industry, the minister said.
The issue affects large industrial consumers who are governed by international commodity prices and can’t pass the costs of the carbon tax along to their customers, officials said. In each individual case, the province will benchmark the industry’s performance and determine if it will pay a certain amount of carbon tax.
If it is below the benchmark, a company can bank carbon credits or trade them to another company. The plan is to reduce emissions without driving companies to leave Manitoba, officials said.
Nick Martin is the bearded guy we keep hidden away at the back of the newsroom. He is now in his fourth decade working in daily newspapers.
Updated on Monday, March 12, 2018 at 7:46 PM CDT: Final edit