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Communities could raise taxes to cover carbon pricing

NWT communities may be forced to pass carbon tax costs on to their residents, NWT Association of Communities CEO Sara Brown told a committee of MLAs on Thursday evening.

Community governments “are not going to be revenue neutral during this process, despite many assurances to that effect,” Brown said, explaining there’s no equivalent to the cost of living offset offered to individual residents under the plan.

Meanwhile, fuel for vehicle fleets and other associated municipal costs will likely filter down to residents through measures like user fees and property taxes. “You’ll just have to increase your taxes,” Brown said. “It’s not revenue-neutral to anyone in the territory.”

NWT Association of Communities CEO Sara Brown told MLAs there may be tax increases as communities grapple with increased carbon tax costs.
Photo courtesy of Youtube

While the organization was “generally supportive” of the carbon tax, she said communities are already short $40 million in needed funds from the GNWT, and will have to gather more revenue as costs go up this fall.  “They do not have any resilience ... to absorb these sorts of increases,” she said.

The committee reviewing the policy, however, couldn’t substantively change the plan: Its chair Kam Lake MLA Kieron Testart said the government, outside of legislative review, had largely decided on the details.

“Right now we’re left in the uncomfortable position of having minimal influence on the details of carbon pricing that Northerners care most about,” he said.

He told News/North the committee was “very frustrated” that it didn’t have the opportunity to properly action resident feedback on the plan.

“When we finally got the plan, there was no real opportunity for regular members to engage on what was being proposed,” he said, adding the Minister of Finance negotiated the plan directly with Ottawa, and left little room for input.

He added there were few accountability or transparency mechanisms built into the plan, unlike British Columbia’s tax plan which tracks where each dollar is spent. Rather, the NWT’s plan directs its revenue into a general stream with the assumption it will go toward rebates.

“The legislature will not approve a tax plan. They will not approve a carbon pricing scheme. That will be left to cabinet,” he said.

The plan will price greenhouse gasses at $20 per tonne, and is expected to annually increase to $50 per tonne in 2022. It also rebates heating fuel, and exempts aviation fuel.

Also under the plan, large emitters like mines will get a 72 per cent rebate on their carbon tax, and 12 per cent will go into individual trusts.

These operators can then access the trusts to invest in further greenhouse gas reductions. Cabinet plans to manage the remaining funds.

In committee, both Testart and Frame Lake MLA Kevin O’Reilly noted the two bills implementing the plan are light on the details of rebate implementation and associated reporting.

NWT Association of Communities CEO Sara Brown added the territorial government's plan for its carbon tax revenue doesn’t “leave anything left over” for local investment in projects like energy planning.

“Communities are always looking for funding to move ahead with their doing and implementing their energy plans,” she said.

Recently speaking to News/North, Nahendeh MLA Shane Thompson also shared his concerns over the tax’s effects on communities, saying it meant “more costs for (communities) to do their traditional way of life.” He added that residents caught waiting for rebates at tax time could face financial difficulties.

When O’Reilly asked if the territory had made any commitments “to do more than talk about” funding, she said there were currently none.

Sahtu MLA Daniel McNeely, meanwhile, said that efficiency should come before more funding.

“Rather than asking for more money, let’s work with communities on reducing what they already have,” he said, though Brown said her office was already engaged in energy efficiency work.

Testart told News/North “we don’t have clear commitments from the government to offset those (communities' cost) increases” as a result of the carbon pricing regime.