Liberals ask Houston to help Nova Scotians as carbon tax set to hike fuel costs on July 1

For months, Premier Tim Houston has railed against what he calls “the federal carbon tax,” which will impose an additional 14 cents a litre on gasoline and 17 cents a litre on home heating fuel starting July 1.

Nova Scotians have been insulated from these big increases. The tax on carbon has been in place for 4.5 years as a means to price pollution and change people’s behaviour. In most provinces, that has meant an 11-cent increase, but in Nova Scotia, the tax on gasoline has increased only one cent to 1.5 cents a litre over the same period because of an alternative emissions system known as cap-and-trade.

On Wednesday, Liberal leader Zach Churchill issued a news release in which he called the impending 14-cent increase at the pumps “the Houston gas tax.”   

Here’s the Liberal’s explanation in a news release: 

Nova Scotia will face the steepest increase in the country on July 1 because the province previously benefited from the cap-and-trade program which only charged 1 cent per litre while raising nearly $100 million for a dedicated green fund to fight climate change. 

Negotiating new terms of the cap-and-trade program that expired under the Houston government would have put a gradual price on pollution while continuing to support the green fund. Houston’s carbon tax will do neither.

“We’re seeing the impacts of climate change right here at home with severe hurricanes and wildfires. Putting a price on pollution is the law, and it’s the right thing to do. But when the Houston government abdicated their responsibility and refused to negotiate on behalf of Nova Scotians, they left us with a program that will do less for the environment, and cost people more,” said Environment and Climate Change shadow minister Iain Rankin.

Unsurprisingly, Nova Scotia’s Progressive Conservative government fired back with its own news release:  

The Houston Government has been clear on this issue from the beginning. We need to fight climate change, but we do not need more taxes to do it.  

The federal carbon taxes levied on consumers and producers is set to take effect July 1st, raising fuel costs by as much as $2,000 per year for the average Canadian family. 

“This is an appalling, ineffective measure that is made especially punitive during these times of unprecedented inflation,” said Glace Bay-Dominion MLA John White. “The best path towards a clean renewable sector involves off-shore wind development, green hydrogen, tidal power and development of the Bay of Fundy, not additional consumer and producer taxes on Nova Scotians.” 

Late last year, after deciding not to pursue cap-and-trade, the Houston government submitted an alternative proposal to the federal carbon tax. That proposal was quickly rejected by Ottawa because it did not put a price on carbon, which is a pre-requisite for reducing emissions to slow climate change.  

Quebec continues to retain its cap-and-trade system and former premier and environment critic Iain Rankin said the Houston government should have re-negotiated new terms. 

“To jump from one cent a litre to fourteen cents a litre when other provinces are going up from eleven cents a litre, is throwing away all the work that not only our government has done but governments of all political stripes have done on the environment file,” Rankin said at a news conference Wednesday.

What about the rebate cheques Ottawa will send to offset price increases? 

Earlier in the year, a report issued by the Parliamentary Budget Office (PBO) suggested quarterly rebate cheques would not cover the full impact of the carbon tax for people living in Atlantic Canada. A deeper dive into the PBO’s “A Distributional Analysis of the Federal Fuel Charge under the 2030 Emissions Reduction Plan” by the Globe and Mail determined that most people would, in fact, receive an equivalent amount from the federal government to offset what they paid out.

Globe and Mail editorial writer Andrew Coyne quoted from the PBO study to show most households will get back more in rebates than they paid in tax. Here’s Coyne:  

In six of the seven provinces where the federal carbon tax applies, the PBO estimates that, even at the $170 per tonne the tax will have reached by then (it was recently increased to $65 a tonne), 80 per cent of households will get back more in rebates than they pay in the tax. The only exception is Nova Scotia, where it is more like 50 per cent. But even in Nova Scotia, the average household is a net beneficiary. 

Bottom line: Rebate cheques are supposed to offset the additional price increases paid by consumers on gasoline, diesel, and furnace oil. 

Coyne’s close reading of the PBO document said the statement that the carbon tax will make households net losers by 2030 is based on a projection of the tax’s “economic impact” or trickle-down effect on the price of other goods and services. When that “economic impact” is taken into consideration, the PBO predicts the combined effect of the carbon tax will be to reduce household after-tax incomes slightly — one or two per cent — over the next seven years. Not from what incomes are today, but from what they would have been in the future without the tax. 

The National Observer came to a similar conclusion about the rebate cheques making up for the direct cost of the carbon tax. 

At a news conference on Wednesday, Churchill was asked for his opinion on whether the federal rebate cheques would offset the looming price hikes. He expressed some uncertainty: 

“Nova Scotians don’t know how much they are getting back. I don’t think the premier fought for them to get a better deal,” Churchill said. “I think politics really governed his actions here because he would rather have a hammer to attack Liberals with over a carbon tax than actually find a solution for people in the province”. 

The federal government has told Nova Scotians how much of a Climate Action Incentive cheque they can expect to receive. For a household with two adults and two children, it will be $248 quarterly or $992 a year. A single individual will receive $124 quarterly or $496 a year. 

But with Nova Scotians already struggling with food costs and increasing power bills, the provincial Liberals said a higher carbon tax will make life harder for thousands of households this fall.  

“That’s why we have called on the Houston government to implement affordability measures like immediately freezing the provincial gas tax, ending income tax bracket creep, and implementing a universal school lunch program — all of which the Houston government refuses to do,” Churchill said in the news release.

According to the Liberals, the provincial portion of the tax on a litre of gasoline works out to 15.5 cents. Dropping that would cost the provincial government about $263 million a year in revenue, the party said. 

The New Democratic Party expressed similar concerns Wednesday in a news release. NDP leader Claudia Chender said: 

In a matter of weeks Nova Scotians will see a dramatic increase in the cost of fuel in our province. This will come on the heels of historic cost of living increases on everything from food to housing and power… 

There are many things Tim Houston could do as premier to help Nova Scotians better manage rising prices, including cutting the tax on prepared food in grocery stores, freezing senior and family pharmacare fees, and permanently increasing and indexing the thresholds for home heating programs like HARP “

The carbon tax continues to be a political football, even though Nova Scotians are experiencing more damage from hurricanes, floods, and fires than ever before.