Thank you, Mr. Speaker.
Committee Had a Hard Time Comparing Gnwt Approach To Federal Backstop
Committee's primary work for this review was to compare the GNWT's approach with the federal backstop. This work was challenging due to a lack of information from the department and overall uncertainty about what the federal system would look like if Bill 60 fails.
Committee asked the department why the GNWT's approach is better than the federal
system. The department provided three main reasons:
- Greater freedom to design the carbon rebate system;
- Flexibility to adjust how the tax is applied; and
- More certainty for new mines, small mines, and mines that are shutting down.
Committee questions how well the government is using the first advantage. While the GNWT has more freedom to design rebates as it sees fit, its proposal for 2023-2024 keeps a quarter of revenues in general revenues and leaves out several affected groups. The government has also pursued minimal consultation on how to use rebates. The Yukon, by contrast, is under the federal backstop and still designed its own rebate system.
Committee also asked the department what would happen if the Legislative Assembly does not pass Bill 60. The department expects the federal government would impose its backstop starting April 1st, 2023. The government would need to eliminate its carbon tax to avoid double taxation and would likely remove its carbon tax rebates, including COLO.
The Minister has said that if the federal backstop applies, it is uncertain how the federal
government would return revenues to the Northwest Territories. Two approaches are possible. First, the federal government says that provincial and territorial governments that "opted" for the federal backstop receive all proceeds and can decide how to spend them. This approach is like the arrangement in place in Yukon and Nunavut. Second, in "remaining provinces" where the backstop is in effect, the government uses 90 percent of the revenues to provide direct "Climate Action Incentive" payments to households. People in rural and smaller centers receive a 10 percent top-up. The GNWT has not been clear on which approach it would take if Bill 60 fails.
Though committee asked, the department was not able to provide data comparing how rebates under the federal backstop options would compare with the GNWT's approach. Committee is uncertain whether residents would be better off under the GNWT's approach or the federal backstop.
Mr. Speaker, I'd like to turn this over to my colleague, MLA Yellowknife North.