5 things to know about Canada’s carbon tax

If you have upcoming tours to popular Canadian destinations like Toronto, the Stratford Festival or Niagara Falls, the trip is going to cost you more. But the bigger hassle may be the extra paperwork required because of the new Canadian green tax that aims to reduce greenhouse emissions.

Here’s what you need to know about the Trudeau government’s controversial carbon tax, put in place on April 1st.

  1. It’s complicated. The federal tax only affects four out of 10 provinces that don’t have their own carbon-pricing plans. British Columbia has its own carbon tax at $30 per tonne, or about seven cents for a liter of gas, while Quebec and Nova Scotia have a more complicated cap and trade, which requires companies to pay for the pollution they create. “It’s complicated because there are so many layers to this,” said Doug Switzer, president & CEO of the Ontario Motor Coach Association (OMCA).


  1. It’s geographical. Ontario is one of four provinces—along with Manitoba, New Brunswick and Saskatchewan—operating under the federal rules. It will be implemented in the territories of Nunavut and Yukon beginning July 1. This new tax applies to anybody operating, even U.S. operators. They have to register online (forms and information at https://bit.ly/2ZLbxHG) and pay a tax on the fuel that they consume in the province. If you are based in Oregon and make a run up to British Columbia to take people skiing in Whistler, it doesn’t apply because the province approved its own tax that is collected at the pump. But if you are heading to Ontario’s Niagara Falls, Stratford or Toronto, you have to pay a federal tax. “It’s a federal tax, but it only applies in a couple of jurisdictions,” said Switzer, explaining that’s one of the arguments the provinces are making in their legal challenge, that the Greenhouse Gas Pollution Pricing Act is being enforced differently across the country.


  1. It’s political: Prime Minister Justin Trudeau wants to reduce emissions by 30 percent below 2005 levels by 2030, as part of Canada’s commitment to combat climate change and its dire consequences such as rising sea levels. The federal carbon tax, quickly put in place this year, came months after Ontario’s newly elected conservative government scrapped the province’s cap and trade program put in by the previous elected liberal leaders. It required large companies to buy allowances for their carbon emissions, according to Reuters. The conservatives “were playing chicken with the federal government over whether or not this tax would come into effect. This is largely a political bit of gamesmanship in an election year,” Switzer said.


  1. It may be short-term. With lawsuits challenging the federal government’s jurisdiction to apply the tax to only some provinces, and the national election in October that could sweep Trudeau and his liberal government out of office, the future of the tax is uncertain. “So it’s not even clear whether the tax will survive a legal challenge or the election,” Switzer commented.


  1. It may be difficult to enforce for U.S. operators. Canadians doing business in Ontario, Manitoba, New Brunswick and Saskatchewan were required to register as a road carrier with the Canadian Revenue Service (CRA) by April 1, and Nunavut and Yukon by July 1. This filing requires companies to report both miles traveled and fuel consumption. The potential penalty for missing the deadlines is a $2,000 fine—although it’s unclear how the rules will be enforced with U.S. operators, said Switzer. “The tax is sort of like IFTA filing or a national fuel tax. For most operators, unless they run a lot of miles, it’s four cents per liter or about 20 cents a gallon. Unless they run a ton of miles in Canada, they’re probably looking at $100 a trip. For Canadian operators based in those provinces, it’s a major annoyance and thousands of dollars in taxes,” Switzer explained.


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