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Alberta Gov't Plays Down Cost Of Carbon Tax

by Mike Godfrey, Tax-news.com, Washington

02 November 2016


The Alberta Government has said that the economic impact of introducing a carbon levy "is expected to be relatively small."

The Government has released Treasury Board analysis of its Climate Leadership Plan (CLP). It said that, based on preliminary economic modeling, the province's real GDP "is expected to grow at a slightly reduced pace compared to a 'business as usual scenario.'"

"The real GDP impact is expected to be 0.3 to 0.4 percent by 2022, which means growth is estimated to be slower by about 0.05 percent over the next six years," it added.

The report did nevertheless say that the modeling "does not fully capture many of the other potential benefits to Alberta." It stressed that these include "improved market access, improved social and health outcomes, increased cost certainty to businesses from an established carbon price schedule, and new innovations that may arise from pricing carbon."

Under the CLP, a carbon levy will be included in the price of all fuels that emit greenhouse gases when combusted. These include transportation and heating fuels such as diesel, gasoline, natural gas, and propane. It will not apply directly to consumer purchases of electricity.

From January 1, 2017, the carbon levy will be applied to fuels at a rate of CAD20 (USD15) per tonne. The levy will increase to CAD30 per tonne from January 1, 2018, and to CAD50 by 2022.

The Government expects the levy to raise CAD9.6bn over the next five years, CAD6.2bn of which will be reinvested in diversifying the province's energy industry, and CAD3.4bn to help households, businesses, and communities adjust to the levy. The latter figure includes the cost of carbon rebates for low- and middle-income families, and the CAD865m earmarked to pay for a cut in the small business tax rate from three percent to two percent from January 1, 2017.

TAGS: environment | tax | small business | business | energy | ministry of finance | tax rates | carbon tax | Canada | tax reform

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