Carbon tax will go toward balancing books

Despite initial promises that Alberta’s carbon tax would be revenue-neutral, the province’s NDP government confirmed it would use cash from carbon pricing to balance its books in the long-term.

Alberta released its budget for the next fiscal year Thursday, which shows the oil-rich province will post a smaller-than-expected $8.8-billion deficit this year.

Finance Minister Joe Ceci said the province’s long-term plan for returning to a surplus by 2023-24 will require the use of carbon tax proceeds.

“Beginning in 2021, additional revenue resulting from the federally imposed carbon price tied to the construction of the Trans Mountain pipeline will be used to support vital public services as the province stays on track to balance the budget by 2023,” Ceci said.

The province’s tax on carbon was controversial when it was announced in November 2015.

At that time, Premier Rachel Notley said the carbon levy, which rose from $20 per tonne in 2017 to $30 per tonne this year, would be revenue-neutral because the proceeds would not be directed to general revenues.

Now, the government plans to redirect any carbon levy proceeds above $30 per tonne into general revenues beginning in 2021, when the price is expected to reach $50 per tonne.

The re-allocation would boost Alberta’s revenues by $100 million that year, rising to $1 billion per year by 2023, when the province expects to post a modest $700 million surplus.

Ceci said Alberta’s portion of the tax, which he puts at $30 per tonne, would still fund pollution-reducing initiatives, while the federal portion, anything above $30 per tonne, would go to general revenue.

“The Alberta Climate Leadership funds will continue to be re-invested in Alberta — that’s not changing. The additional federally imposed carbon price, that’s tied to Trans Mountain, we’re going to be using that to provide Albertans with vital programs and services that they rely on,” Ceci said.

In the meantime, Alberta will not be counting its carbon tax money for its general revenues and the budget shows continued deficits.