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N.W.T. floats carbon tax idea

| Sourced From CBC |

The Northwest Territories government wants the public’s thoughts on whether to introduce a carbon tax on gasoline, diesel and other fossil fuels.

A discussion paper released Thursday by the N.W.T. Finance Department floats the idea of a “revenue neutral” carbon tax that would encourage residents and businesses to cut down on how much fossil fuels they use, and therefore bring down the amount of greenhouse gas emissions generated.

“We’ve put the document on the table and we’re looking to have a discussion,” Finance Minister Michael Miltenberger told CBC News on Thursday.

“We’re not, at this point, promoting a carbon tax. But we know it’s one of the things that’s out there, and we’re looking for discussion and feedback.”

The Northwest Territories does not have a provincial or Harmonized Sales Tax. The territorial government has been seeking revenue-generating options over the past two years.

A possible carbon tax would apply to fossil fuels used for transportation, energy generation and home heating, and would be imposed in addition to the N.W.T.’s existing fuel tax.

The current fuel tax applies to the consumption of gasoline, rail and aviation fuel and diesel, with rates ranging from one cent per litre for aviation fuel to 11.4 cents per litre for rail fuel.

However, natural gas, propane and space-heating fuel are currently exempt from the fuel tax. Those fuels would not be exempt from a carbon tax, according to the discussion paper.
More tax for carbon-heavy fuels

How much a given fuel is taxed would depend on its carbon content, with heavier taxes levied on fuels that contain a higher carbon content.

Using an example tax rate of $10 per tonne of carbon dioxide equivalent emissions, the carbon tax would range from 1.54 cents per litre of propane to 2.61 cents per litre of jet fuel, according to the discussion paper.

“Based on the 2009-10 fuel consumption data, it is estimated that a N.W.T. carbon tax would generate $11.2 million in revenue at the above tax rates,” it states in part.

However, any revenue generated by a carbon tax would flow back to residents and businesses in the form of tax credits or income tax reductions, according to the discussion paper.

Quebec, Alberta and British Columbia are currently the only Canadian jurisdictions with carbon taxes.

The discussion paper does point out some potential drawbacks of a carbon tax, such as higher costs in public housing units and other facilities that spend a lot of money on heating and energy.
Hotel tax also proposed

Also being proposed in the N.W.T. discussion paper is the idea of introducing some kind of hotel room tax, with the income generated to be used for promoting the territory as a tourism destination.

Finance officials are seeking the public’s opinion on whether to let municipalities impose their own hotel room levies, or put a territory-wide hotel tax in place, or allow hotels to charge a “destination marketing fee” on a voluntary basis.

The suggestions of a carbon tax and a hotel tax have resulted from two rounds of consultations in 2008 and 2009.

The Finance Department is encouraging N.W.T. residents to read the discussion document and give their feedback on the two proposed taxes by Oct. 31.

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