The province of Alberta has its own kind of New Year's resolution, cutting back on greenhouse gas emissions.
The carbon levy, which came into play Jan. 1, is the province's way of reducing greenhouse gas emissions. It puts a charge on fuels, including diesel, gasoline, natural gas and propane, at a rate of $20/tonne. The charge based on the amount of carbon pollution released by the fuel when it is combusted. This rate will increase to $30/tonne as of Jan. 1, 2018.
As a result residents can expect to see increases across the board, not just at the pumps.
The carbon levy and your family
An average family of four is estimated to pay about $340 in 2017 due to the tax, a cost that is anticipated to increase to $508 by 2018.
The revenues from the levy will be reinvested back into Alberta, with 66 per cent of families eligible for a carbon tax rebate according to the province government. The rebate is provided to lower and middle-income households to help offset the cost of the levy. Full rebates will be provided to single Albertans who earn $47,500 or less annually, and couples and families who earn $95,000 or less per year.
The way the rebate works is that the first adult in a household is eligible for a rebate up to $200. A spouse is eligible for $100, while each child, with a maximum of four, is entitled up to $30 each.
This year, a family of two adults and two children could see about $360 thanks to a full rebate. Next year, that will increase to $540. The funds come in the form of multiple payments throughout the year, depending on the amount someone is receiving.
“There are going to be restrictions to that… it's going to be for a certain segment of the population in relation to their annual income, so yes it is going to affect some people, but it is not going to affect everyone,” explained Andrea Yaremie, executive director for the Bonnyville and District Chamber of Commerce.
There is also a partial rebate for those outside of the low and middle-income family range. For example, a family of four with a net income of $101,500 would fall under this category.
The rebates are calculated off of typical fuel use and assumptions for one year including 4,400 litres of gasoline and 135 gigajoules of natural gas.
“The big thing here is these payments are calculated on just the cost of gasoline and natural gas for your home, but as we know there is more to this,” said Bonnyville-Cold Lake MLA Scott Cyr, adding the amount families will be receiving is a mere pittance to what they will actually be spending.
Lakeland residents also reflected Cyr's disconcert, taking to the Nouvelle Facebook page. One resident said the government is failing to “account for increases in food or anything that is trucked in, plus the increase to make-up profit margin.”
They added that taxes would increase to help offset the cost of policing, government workers and road maintenance and construction.
Others threatened to leave the province if things don't change in the next election, and are considering retiring elsewhere.
“Any policy that takes more from the taxpayer than is necessary to achieve its goal is poor policy. Any additional funds collected are wasted by the government administration,” was another resident's comment.
A breakdown of where the funding is going
Over $9.6 billion in funding is predicted over the next five years through the levy, with $6.2 billion being used to help diversify the province's energy industry.
Approximately $3.4 billion will be used for large-scale renewable energy, bioenergy and technology, while $2.2 billion will be set aside for green infrastructure like public transit. A provincial agency used to support energy efficiency programs and services for homes and businesses, known as Energy Efficiency Alberta, will see a total of $645 million in carbon levy funding.
In total, Albertans will see $3.4 billion in funding, with $2.3 billion set for carbon rebates, and $195 million slated to assist coal communities and Indigenous, among others, in the transition.
Small businesses receive a helping hand
Also included in that funding is $865 million to offset a cut in the small business tax rate, which as of Jan. 1, was reduced by one-third.
“Small businesses are a vital part of Alberta, contributing roughly one-third to the provincial economy and employing more than half a million people. Reducing the small business tax rate by 33 per cent supports jobs and will help businesses adjust to the new levy as they work to reduce their carbon footprints,” said Joe Ceci, president of the treasure board and minister of finance.
The adjustment will help ease small businesses into the ways of the carbon levy, said Yaremie.
The cut follows a two per cent increase to the 10 per cent tax after the NDP government won the election. The amount has since been decreased to 11 per cent, putting Alberta in line with Saskatchewan in terms of small business tax.
“I don't think it is going to be enough,” Yaremie explained, adding the carbon levy is not the only item that affects businesses, but also the minimum wage increase and inflation.
“When minimum wage goes up, it causes a ripple affect, which means everything else goes up. So from that context alone you are going to see an implication for small businesses. Then you add this carbon levy on top of that, and again, it is going to have a substantial impact for businesses.”
Prices going up, not just at the pumps
Prior to the kick-off of the New Year, Albertans began to see a rise in gas prices. According to Senior Petroleum Analyst for GasBuddy.com Dan McTeague, it's an issue that stemmed out of the cost per gallon coming out of the United States. This increase didn't include the incoming carbon tax, which saw a nearly five cent increase per litre of fuel.
“I think the base price… is likely to go down at some point. When is really the question, not if,” said McTeague, adding the prices may fluctuate over the next few weeks by a few cents, but no more than that.
He noted although the base price could fluctuate, the carbon levy is here to stay. So, the province that was at one point the cheapest province in Canada in terms of gasoline has now slid into third place behind Manitoba and Saskatchewan.
The increase in gas price comes with an additional price tag, an increase in general goods and services. The impact this year is expected to cost anywhere from $50 to $70 per household, increasing to $70 to $105 per household in 2018.
“Food is going to cost more, clothing is going to cost more, everything you do in your life is going to cost more,” said Cyr.
Yaremie added although the price of products is expected to increase locally due to transportation and warehouse costs, it is important to bear in mind the role small businesses play.
“One of the nice things about small businesses is that they are such a staple in communities and they provide such a foundation for communities and usually invest a lot more back into their communities… it is one of those things we have to be mindful of, is the benefit that small business provides to our communities.”
How rural Alberta fits in
Living in a rural community means small businesses that rely on transportation to deliver their goods or services will be forced to increase their prices because of the cost of transporting and storing their products. This will have a major impact on the cost of their goods, which could lead residents to shop elsewhere, either online or outside of the community.
“This tax disproportionately harms rural Albertans because we don't have the same infrastructure some of the big cities have… so we don't have the buses or the ability to get to places without having long distances to travel,” said Cyr.
Transportation alone for those living in rural Alberta is going to have a number of implications, Yaremie noted.
For those living in the northern areas of the province, they will also feel the pinch through their natural gas bill.
Yaremie said although she understands the importance of the environment, it will be difficult for rural Albertans to cut back on their emissions because of the distances between places and the cooler temperatures.
