Every liter of gasoline or diesel Nova Scotians pump into their vehicles returns 15.5 cents to provincial coffers through the fuel tax, but Finance Minister Allan MacMaster said it was not cutting into this reserve of 260 million dollars is not an option – and he blames the federal government. government.
Speaking to reporters at Province House on Wednesday, the MPP for Inverness said the Trudeau government has barred the province from cutting any tax that would negate the carbon tax that Ottawa is likely to soon impose on the province .
“They just said we couldn’t do it.” said MacMaster. “There’s a federal document that says you can’t offset carbon pricing because that would defeat the purpose of what they’re trying to do, which is to try to raise the price of fuel , so people stop buying it.”
Provincial ministers have repeatedly called the upcoming federal fuel tax a Liberal carbon tax.
Nova Scotia does not want a federal carbon tax, but is only halfway to meeting tough new federal rules aimed at reducing greenhouse gases.
As part of the provincial plan, the Houston government imposed a carbon tax on Nova Scotia Power and cement maker Lafarge this fall. But he stubbornly refused to do the same for fuels such as gasoline, diesel and fuel oil.
Newfoundland and Labrador slashed its provincial fuel tax, officially known as the motor fuel rate, by nearly half earlier this year as a temporary measure to help motorists in that province.
MacMaster said he didn’t know why Ottawa would have given the province the go-ahead to cut the tax, though he hinted there may have been partisan considerations.
“They have a provincial Liberal government there, maybe they got a better deal, I don’t know,” MacMaster said.
This leaves the Houston government in a position where it is willing to challenge Ottawa on a carbon tax on fuels, but not ready to go against its wishes on a fully provincially controlled tax.
Commercial and agricultural vehicles as well as fishing boats are exempt from the fuel tax.
“The federal government doesn’t want us to interfere with the price signal sent by the carbon tax,” MacMaster said. “So if we lower a tax that offsets the tax they’re trying to add, they don’t want that to happen.”
“And as you know, the federal government, we depend on them for a major source of revenue that comes into the province. So there are the transfer payments, the health transfer, the social transfer.”
Asked by reporters if Ottawa had made an explicit threat to cut transfers, MacMaster said that was a better question for the federal government.
The Federal Benchmark for Carbon Pollution Pricing
The Nova Scotia Department of Finance later provided reporters with a backgrounder from Environment and Climate Change Canada that set out the requirements for meeting the federal government’s 2030 climate change emissions reduction targets.
Among the stipulations, that “provincial government measures do not weaken the price signal, for example by granting instant rebates linked to the amount of the carbon price paid or by explicitly reducing fuel taxes in order to offset the carbon price “.
The document does not provide any information on what could happen to provinces that refuse to comply.
“What would they do to us? I’m not going to speculate what it would be,” MacMaster said, just minutes after discussing possible transfer cuts.