CARBON TAX CONFUSION
Rules still hazy as costs start to rise
The towering red posts straddling the centre of Lloydminster are ground zero for the effect of Alberta’s new carbon tax.
They run along Meridian Avenue, the north-south corridor through the city that marks the Alberta-Saskatchewan border.
On the western side of the street, the area code is 780 and gasoline is now subject to a per-litre 4.49cent carbon charge. On the other, 306 prefixes phone numbers and the government remains staunchly opposed to any such tax.
The tax, which kicked in on New Year’s Day, brought stormy ire from opposition parties and at rallies across the province in 2016. Opponents say the $20-per-tonne carbon price will do little to change global emissions and further damage Alberta’s fragile economy, which is just beginning a shaky recovery from the oil-price crash.
The Progressive Conservatives were quick to criticize the NDP first thing Sunday morning, with energy and environment critic Rick Fraser declaring, “Today marks the beginning of a sharp decline in quality of life for our province.”
Across Alberta, the carbon tax’s affect on gasoline prices was immediate, with prices in most major centres trending upwards on Gasbuddy.com.
But in Lloydminster, consumer willingness to drive a ways to find price savings has Alberta-side gas stations worried about plummeting sales as people and transport drivers fuel up east of Meridian Avenue.
Mayor Gerald Aalbers feels his city’s unique conundrum is rarely on the radar when governments develop province-wide plans. For him, the carbon tax is just another example.
In Lloydminster Sunday, gas prices were fairly consistent at around $1.08 on both sides of the border, but in the lead-up to the new year, Aalbers envisioned a trickle-down effect on the horizon.
No more sales of the snacks for your kids as you head inside to pay for a tank of fuel, no truck stop meals or coffees to fuel the drive to your destination.
“We’ve all lived through levies and taxes — it’s something we just have to face,” he said.
“But, by the same token, anytime ... you’re making an imbalance in the city, it concerns me.”
UNIQUE LLOYDMINSTER
For decades, Lloydminster has worked hard to create a seamless city from one province to another. Despite challenges in health care and education, it has generally worked.
But in a December question period, when the region’s Progressive Conservative MLA Richard Starke asked how the government was stymying the imbalanced effect of the tax in the city, there were no hard answers.
The province has said it’s in talks with Lloydminster businesses and officials.
In the days leading up to the implementation of the carbon tax — during that slow, ambling week between Christmas and New Year’s Day — there was no movement on a plan, although there may be some kind of agreement in 2017.
Even if an exemption appears, it would only be in place until federal carbon pricing begins in 2018.
In the meantime, Aalbers hopes the Alberta government considers a similar approach to Saskatchewan’s provincial sales tax.
When the PST was introduced, the city lobbied the province, explaining there would be no retailers left on the Saskatchewan side, and the government relented.
“It’s tough, I’m sure, because once you make an exemption, everyone would like an exemption,” Aalbers said. “All I’m asking for — I believe people in Lloydminster are asking for — is to be as even as we can.”
A RUSHED SYSTEM
With 2017 just days away, Darren King wasn’t interested in weighing in on the carbon tax as policy, but he wasn’t impressed with its execution.
“It’s the lack of foresight, their lack of understanding of the impact, the way they’re implementing it — that’s the issue,” he said.
King is president of Lloydminster-based Kings Energy Group, a wholesale fuel company primarily supplying the oilpatch. To qualify for an automatic carbon tax exemption, 80 per cent of sales have to land outside of Alberta. In Lloydminster, sales for businesses like King’s tend to be split about 50/50 between Alberta and Saskatchewan.
Although King is expecting word on rebates in early 2017 — around the same time the province plans to announce energy efficiency programs — the ambiguity unsettled him.
“In the wholesale fuel industry, our biggest worry is (the province is) tying up a big chunk of our working capital with a process that isn’t outlined yet, and they don’t seem to be willing to recognize that — in this community especially — there are some unique challenges,” he said.
“They’re taking a blanket approach that seems hastily implemented and not very deeply thought through.”
The carbon tax was announced more than a year ago, but just days before Jan. 1, the government was still ironing out an exemption for Alberta’s greenhouses.
“I’m surprised that a tax with that magnitude, with that many ramifications, that some of these considerations weren’t outlined prior to its implementation,” King said.
“We’re basically getting on the road not knowing quite how we’re going to get there.”
THE CREATIVITY FACTOR
The NDP has been clear that the carbon tax is part of its environmental agenda.
Premier Rachel Notley hopes it changes people’s behaviour, encourages them to look at energysaving changes in their lives.
Yet in late 2016, Opposition Leader Brian Jean tweeted out letters that businesses sent clients warning of fee hikes as a direct result of the carbon tax. A Drumheller-based trucking company called Hi-Way 9 announced a 0.8 per cent carbon surcharge, and the Edmonton YMCA advised clients that daycare fees would rise due to the tax and higher minimum wages.
In late December at High Q Greenhouses just outside Morinville, owner Michiel Verheul walked around his operation pointing to thick insulation, hanging rails and shelves to maximize space, fans that circulate warm air, stacks of plastic pots that are reused year after year.
More environmentally friendly, cheaper — it’s a no-brainer for his industry.
“Using carbon or energy is a necessary evil for us,” he said.
“Are we creative? Yes. Are we embracing technology? Definitely.”
Verheul has been in the greenhouse business for close to 30 years, and says the carbon tax is by far the largest, quickest change he has ever seen for his industry.
Months of behind-the-scenes negotiations resulted in an 80 per cent rebate for greenhouses for the next two years, but there’s still a limit to energy-saving solutions available for the industry.
Aalbers doesn’t envisage small businesses in his city picking up and moving to Saskatchewan as a result of the carbon tax, but suspects investors will consider their options more carefully.
“People may say, ‘Well I’m going to get up and leave,’ and they might,” he said.
“They may move their small business across the border, but I think it’s going to be more prevalent in longer term planning.”
Speaking with reporters Sunday, just as drivers started seeing the impact of the tax on the pump, deputy premier Sarah Hoffman acknowledged people probably aren’t going to be happy about the 4.5cent carbon tax on gas, but called on the opposition to lay down its sword and think of the future.
“(Pipelines) are a way for me to remind myself of the long game here,” Hoffman said.
“The prime minister made it very clear that if we didn’t have a price on carbon, he wouldn’t have been in a position to approve those pipelines.”
She didn’t fill up her car before the tax kicked in. She’ll do that later this week, when the tank is closer to empty.
On the first day of 2017, Hoffman looked at the extra 4.5 cents per litre she will pay as billions of dollars for the province’s coffers, earmarked for economic diversification.
“That’s crucially important for Albertans and Alberta communities,” she said.