Mr. Speaker, the bill before us identifies a real issue, but proposes the wrong policy response.

My colleague from Langley—Aldergrove is correct to point out that the GST will apply on top of carbon pricing, and he is correct to be concerned that this cost will have a disproportionate impact on lower-income Canadians. However, the proposal to remove GST from carbon pricing is impractical. A far better solution would be to use those additional GST revenues to finance a rebate targeted to lower-income Canadians to offset the impact of carbon pricing.

Why do I suggest that it is impractical to remove the GST from carbon pricing?

I would first point out that the GST already applies on top of provincial fuel taxes. For example, my home province of Saskatchewan has a provincial fuel tax of 15¢ a litre on gasoline. My neighbour province of Alberta charges a very similar tax on gasoline, but it is divided up between a 13¢ provincial fuel tax and a 4% provincial carbon tax. Essentially, what the bill proposes is that the GST would continue to apply to the fuel tax, but for some reason, it would not apply to the carbon tax.

I do not think we have heard an explanation from the member for Langley—Aldergrove as to why we should apply the GST to a tax that is labelled a “fuel tax”, but not apply it to a functionally-identical tax called a “carbon tax”. If the bill were adopted and passed into law, provincial governments could all exempt their fuel taxes from the GST simply by renaming them “carbon taxes”. I think that is clearly not the intention of the member for Langley—Aldergrove, but it is a consequence of the proposed bill.

Even if there were a solution to that issue of existing excise taxes versus carbon taxes, there is absolutely no way to remove the GST that would apply to price increases arising from a cap-and-trade system. Carbon pricing is being rolled out in different ways across the country. Some provinces have enacted carbon taxes, which the bill addresses, other provinces have decided to put a price on emissions through cap and trade, which the bill does not address.

Therefore, again, it is unclear why we would seek to remove the GST from a price increase that results from a carbon tax, while continuing to apply the GST to price increases that arise from cap and trade.

Therefore, I think it is clear that it is not really feasible or desirable to try to remove the GST just from this one type of carbon pricing.

A far better solution would be to recognize that the government will inevitably collect additional GST when consumer prices are increased by climate change policies and then to use that money to provide a rebate to lower-income Canadians to offset the cost of carbon pricing. This is a practical solution that is already in effect in other jurisdictions.

For example, the progressive government of Rachel Notley in Alberta has enacted a very generous rebate program along with the carbon tax. In fact, the rebate in Alberta is so generous that many lower and middle-income Albertans actually have more money in their pockets now than they did before the carbon tax was enacted. Therefore, if the goal of the Conservatives is to help lower-income Canadians and shield them from the burden of carbon pricing, the way to do that is to transfer money to them directly. The Alberta government has already shown us how to do that.

I would also note in this vein that our new federal leader, Jagmeet Singh, ran on a platform that would “ensure that carbon pricing is twinned with rebates to make it more affordable and fair for low and middle income Canadians.” The solution is already there, and it is a better solution than the one proposed in this bill.

I would like to put a few numbers on the type of rebate we are talking about, because the GST that the federal government will collect could fund a significant amount of assistance to lower-income Canadians. By the year 2022, the federal government will be requiring a carbon price of at least $50 a tonne. Canada's current emissions are about 700 megatonnes, so we are talking about $35 billion of carbon pricing. Apply the 5% GST to that carbon pricing, and we are talking about additional revenues of $1.75 billion. That is a significant amount of additional GST revenue that will inevitably be collected on top of carbon pricing, frankly with or without this bill. If we use that money to boost the existing GST credit, we could increase it by one-third. The federal government needs to take advantage of the fact that it has this additional GST coming in from carbon pricing, and increase the GST credit, which is already based on income and already very well targeted to lower-income Canadians.

Once again, to sum up, we have a bill before us today that identifies a real issue, the application of GST on top of carbon pricing, as well as the disproportionate effect that could have on lower-income Canadians. However, the bill proposes an impractical solution. It talks about trying to take the GST off carbon taxes when the GST already applies to excise tax on gasoline, which is in effect the same type of tax. We should not be basing GST policy on the name of the tax; we should base it on real economic factors.

Furthermore, the bill does not even pretend to be able to address the GST that is collected on top of a cap and trade system. A far better solution is to accept the reality that if consumer prices increase as a result of putting a price on emissions, the federal government will collect more GST as a result. That will put the Government of Canada in a position to fund a rebate to lower-income Canadians to ensure they are not adversely affected by carbon pricing.

I would speak in opposition to the bill before us, but very much in favour of using the GST revenues from carbon pricing to fund a progressive rebate that would help to ensure we can use carbon pricing to reduce emissions while, at the same time, boosting the fortunes of lower-income Canadians.

Erin Weir

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