Manitoba Offers Trudeau an Olive Branch in Carbon Tax Battle

19 Feb 2019, 05:59 PM IST

(Bloomberg) -- At least one conservative party premier in Canada is willing to work with Prime Minister Justin Trudeau on his controversial new carbon tax.

While conservative leaders in Ontario, Alberta and Saskatchewan have pledged to fight the levy, Manitoba Premier Brian Pallister says he’s open to renegotiating the rate of the carbon tax with Trudeau’s Liberal government.

Manitoba is one of four provinces, including Ontario, where a wide-ranging tax on nearly all fuels is set to take effect in April. The federal government’s move is a “tactical error” as Manitoba was the one Conservative government in the country willing to implement its own carbon reduction plan and is still hoping the federal-imposed backstop on emissions will be short-lived, Pallister said in an interview.

“We hope it’s temporary,” Pallister said Feb. 15 from his office in the provincial legislature in Winnipeg. “I’ve always said the door is open to that, and we’ve made every effort and we continue to work with the federal government cooperatively on a number of fronts.”

Manitoba unveiled its own carbon tax plan in its 2018-19 budget that was to impose a C$25 ($19) per ton levy -- higher than the federally imposed rate of C$20 -- starting Sept. 1. The move was intended to generate C$143 million this fiscal year and cost the average household about C$240 a year, according to the plan.

Lower Cost

Pallister’s government said Manitoba’s plan would have cost less and be more effective than the federal government’s levy, which is set to rise to C$50 per metric ton by 2022. The province scrapped its carbon tax after Trudeau’s government objected to the province’s plan to keep the tax “flat as the prairies,” Pallister said. Federal rules would have imposed Trudeau’s plan after one year and “if I’ve got to fight him in a year I might as well fight him now,” he said.

“We were going to start it higher and keep it flat,” Pallister said, noting small businesses and consumer groups expressed concerns about the uncertainty of an escalating tax. “Our numbers showed that would work better.”

Pallister maintains he still has a good working relationship with the prime minister as “we tell the truth to each other,” he said. While he doesn’t believe the issue will be resolved before the tax takes effect April 1, Manitoba will be watching the outcome of a provincial court challenge to Trudeau’s plans, he said.

The carbon levy is shaping up as a key issue in the October federal election, as Trudeau follows through on his pledge to impose a tax on provinces that don’t already have a plan in place. Alberta has a carbon tax, though Jason Kenney, the opposition party leader who is favored to win the spring election in the oil-rich province, has vowed to kill it. Provinces including British Columbia and Quebec already have a tax or a cap-and-trade system.