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Unfair carbon tax in New Brunswick

CFIB recently published the results of a survey that shows the majority of small businesses in New Brunswick oppose the federal carbon backstop plan. The message to Ottawa is clear, work with the province to customize the approaches used to address climate change. Imposing the federal carbon backstop in New Brunswick is bad public policy.

Commentary - Public Policy Through the Looking Glass

Statistics Canada released new data a few days ago on greenhouse gas emission in Canada. With the federal government’s heavy-handed imposition of a carbon pricing scheme on New Brunswick, this evidence shows an astonishing gap in logic.

From 2009 to 2016, New Brunswick’s total emission of greenhouse gas went down by 15%. Manufacturing (-10%), transportation and warehousing (-12.8%), other services and public administration (-25.4%), utilities and construction (-30.9%), mining, quarrying, and oil and gas extraction (-35.9%) and the biggest drop in emissions came from wholesale and retail sectors (-50.6%). The only two categories where our emissions increased during this period were agriculture, forestry, fishing and hunting (+4%) and households (+11.6%).

Once you see these numbers, you can’t unsee them.

Total emissions are down, emissions in most sectors of our economy are decreasing while “pollution” from households is increasing. Additionally, two of the sectors where emissions are going up, agriculture and fishing are being provided with “relief” from carbon pricing.

In this context, the mental gymnastics required to make any sense of the carbon tax backstop being imposed by the federal government in New Brunswick are enough to give anyone a migraine.

Starting on April 1st, prices at the pumps will go up by 4.42 cents per litre. The federal government’s plan is to provide households with a rebate when they complete their income taxes to offset the increased gas tax. Next year most households will get a rebate cheque and some will get more than it cost them in increased energy costs. For small and medium businesses, it’s another story. While paying almost half of the net fuel surcharge they will have to apply to a yet to be defined program funded with approximately 7% of the total revenues collected from the carbon tax. It’s supposed to be 10%, but because some households will get more through rebate cheques the federal government decided businesses would pay for this household “bonus”.

In other words, this is the situation in New Brunswick. Households whose greenhouse gas emissions are increasing will get a rebate cheque to offset the carbon tax. Small-and medium-sized businesses, where greenhouse gas emissions are going down, will be forced to pay a disproportionate amount of the increased price on carbon while jumping through hoops to access a sliver of the funding.

Is this federal public policy well-conceived for New Brunswick or does it sound like up is down, left is right?
It should come as no surprise that CFIB members in New Brunswick who responded to a recent survey strongly (62%) or somewhat (19%) agreed that the proportion of rebates which will be allocated to households versus small businesses and other groups is unfair.

While many business owners recognize the importance of acting to protect the environment and have taken steps to reduce their carbon footprint, the majority of small businesses believe this carbon tax plan is deeply one-sided.
As the Nobel laureate economist Joseph Stiglitz once stated “Tax policy should reflect a country's values and address its problems.”

What are the problems facing New Brunswick? The big ones are clear. Ten years of economic stagnation. Declining private sector investments. A demographic time bomb that’s starting to hitting us squarely in the face, limiting not only the choices of government but those of the private sector as well.
Will this federal carbon tax backstop help us address our big problems in New Brunswick? The simple answer is no. Is it adapted to our reality? No, it is not.

While many are still scratching their heads as to why the provincial government carbon plan was rejected by the feds, one thing is evident. In our province there is no need to punish small and medium sized businesses when they are clearly doing their part in reducing greenhouse emissions. While writing cheques to residents may be good politics in an election year, over-rewarding households, whose emissions are increasing, defies logic.

The federal government should work with the province to customize the approaches used to address climate change. Imposing the federal carbon backstop in New Brunswick is public policy through the looking glass.

Louis-Philippe Gauthier is the director of provincial affairs for the Canadian Federation of Independent Business in New Brunswick.