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Alberta's Carbon Levy Enters Into Force

by Mike Godfrey, Tax-news.com, Washington

03 January 2017


Alberta's CAD20 (USD14.90) per tonne carbon levy entered into force on January 1, 2017 and will be charged on all fuels that emit greenhouse gases when combusted.

The rate is based on the amount of carbon pollution released by the fuel when it is combusted, not on the mass of fuel itself. Fuels covered by the levy include transportation and heating fuels such as diesel, gasoline, natural gas, and propane. Certain fuels, such as marked gas and diesel used on farms, are exempt. The levy does not apply to electricity.

The rate will rise to CAD30 in 2018.

Rebates will be provided to lower- and middle-income households to offset costs associated with the carbon levy. According to the Albertan Government, 60 percent of households will receive a full rebate, worth CAD200 for an adult, CAD100 for a spouse, and CAD30 for each child under 18 (up to four children). Full rebates will be provided to single Albertans who earn CAD47,500 or less, and couples and families who earn CAD95,000 or less.

The rebate is solely tied to income and not to energy use, to ensure that eligible recipients have a financial incentive to reduce household emissions.

The levy is expected to raise CAD9.6bn over the next five years. The money raised will be invested in diversifying the energy industry and will fund the rebate program.

To help businesses adjust to the levy, the province's small business corporate income tax rate was cut from three percent to two percent on January 1, 2017. The cut is expected to save small business owners CAD185m in 2017-18.

Joe Ceci, President of the Treasury Board and the Minister of Finance, said: "Alberta's Climate Leadership Plan is a made-in-Alberta strategy that means new markets for our resources, rebates for families, and lower taxes for small business."

TAGS: environment | tax | small business | business | pollution tax | tax incentives | energy | tax rates | carbon tax | Canada | tax reform

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