Carbon tax costs are unclear

Municipalities waiting to see what carbon tax will mean to budgets

Municipalities are unclear what price they may have to pay as a new carbon tax comes into effect.

Clearwater County Reeve Pat Alexander said they added $80,000 to the 2017 budget to offset some of the “known costs” of the new levy.

“But there are still some costs that we don’t know what they will be,” he said recently.

There are a number of potential “hidden costs.” While the municipality can estimate how much the levy will affect fuel prices there are other related costs that are not as easily quantifiable.

“If you’re going to have a carbon tax on a litre of propane, what’s unknown is if you are hauling that (propane) for 60 miles to get it to get to you that transportation cost is going to have a carbon tax on it.”

How much that will add to the basic commodity price is unknown.

“Those are the sort of costs where it has not been determined what they will actually be,” he added.

As of Jan. 1, a $20 per tonne carbon tax has been implemented.It is expected to add 5.35 cents per litre of diesel gasoline and 4.49 cents per litre of regular gas.

Alexander said council has had many discussions about the carbon tax and its implications.

Clearwater County, assuming the government has no plans to drop the levy, would have liked to have seen the tax implementation delayed until more is known about costs.

There are various exemptions proposed for residents, municipalities and agriculture to ease some of the financial burden. For instance, purple fuel used for agriculture is exempt.

The Alberta Association of Municipal Districts and Counties (AAMDC) is watching the issue closely. Rural Albertans, who often must travel longer distances and are involved in industries, such as forestry, oil and gas and mining, have less flexibility to change their behaviour and tax burden, the AAMDC has told the government.

At its fall convention last year, the AAMDC passed resolutions urging the province to exempt agricultural operations and municipalities from the tax.

In an AAMDC survey that Clearwater County filled out, the municipality was asked what impacts the carbon levy could have.

Increases in property tax and reduction in services could result, the municipality says.

Indirect impacts of the carbon levy are reduced economic development activity and job losses, the municipality predicts.

On the positive side, the levy may prompt municipalities to use less fuel, improve fuel and energy efficiency and use more renewable energy.

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