Ottawa will punish Alberta with a higher carbon tax than Quebec: Montreal Economic Institute

A detailed research report by the Montreal Economic Institute (MEI) titled “The Cumulative Impact of Harmful Policies” [PDF] indicates that if a federal carbon tax were to be implemented in Alberta, the province will end up paying 50 per cent more than Quebec.

In full the 60 page document examines the various factors impacting Canada’s energy sector with a particular interest in Alberta.

“There are no valid reasons that justify a carbon tax being 50% higher than the de facto rate currently in effect in Quebec’s cap & trade system, as Alberta’s $30 carbon tax is—and even less to justify it being about twice as high as in Quebec, as the federal tax will be by 2022,” claimed the study.

After being elected, UCP Premier Jason Kenney has indicated his opposition to the province’s $30 a tonne carbon tax implemented by former Premier Rachel Notley.

Currently the province of Quebec has a cap and trade system in effect which was introduced in 2012. The program which has collected $831.44 million in revenue for the government in 2018 currently costs polluters $20.82 a tonne.

Out of all of the provinces in Canada only Quebec has opted for the cap and trade program as a way to reduce carbon emissions. For a brief period in 2018 Ontario was also part of the program until it was cancelled on July 3rd.

As the report indicates by the year 2022, the federal carbon tax for Alberta would be roughly double the amount Quebec has to pay. According to MEI analysts Jean Michaud and Germain Belzile the discrepancy is unjustified.

“To be blunt, there is no reason that justifies such a gap. One province  should not pay an effective rate that’s higher than another,” claimed Michaud and Belzile.

“Still, the federal government approved Quebec’s cheaper plan as  sufficient to avoid the more expensive federal “backstop” carbon tax. We are therefore punishing certain producers more than others, which will  certainly hurt an industry already faced with many problems.”

The Post Millennial reached out to the office of Premier Kenney about the report’s findings but have yet to hear back by the time this article was published.

The MEI report examined various factors including carbon tax revenue, production and consumption before arriving to its final conclusions.

“Finally, a carbon tax should not be the pretext for a cash grab by the government. This means that any carbon tax should be compensated by an equivalent reduction of other taxes, preferably the ones that are the most de-structive in economic terms: corporate taxes on profits and personal income taxes, for example,” suggests the report.