Carbon tax rebates not equal to costs

Glacier FarmMedia – The average rebate farmers can expect on the carbon tax they paid to dry grain is $820 per farm, according to a federal finance official.

Bill C-8, the federal government’s answer to calls for natural gas and propane used to dry grain to be exempt from carbon pricing, passed last month. 

Why it matters: In some cases, farmers have had to manage significant carbon tax bills on top of paying for energy.
Miodrag Jovanovic, assistant deputy minister in the tax policy branch, said an estimated $100 million would be rebated in 2021-22 and $122 million in 2022-23.

The rebates are based on $1.47 per $1,000 in eligible farm expenses for the first year and $1.73 per $1,000 in the second year. It received Royal Assent June 9.

It applies in the provinces where the so-called backstop greenhouse gas pollution pricing legislation applies, including Alberta, Saskatchewan, Manitoba and Ontario.

The agriculture committee is studying private member’s Bill C-234, which would exempt natural gas and propane, as well as fuel to heat barns, from carbon pricing. A previous version of the bill was passed but did not get through the Senate before the last federal election was called.

Jovanovic told the committee that if an exemption is provided through C-234, farmers in the four provinces would benefit more than others because they’d get the refundable tax credit while also getting the exemption.

“Such double compensation would come at the expense of the households or other sectors in those provinces,” he said.

Opposition committee members focused on the fact that individual farmers won’t be completely reimbursed for the carbon tax paid.

Jovanovic said the objective is to reimburse the total amount but some farmers will get more than they paid and some will get less.

“The intent is not to pay back what each farm paid. That’s different,” he said.

But Conservative agriculture critic John Barlow said farmers have been misled about the rebate because they’ve been told the carbon tax is revenue neutral.

“We’ve heard from farmers in Ontario that they’re getting about 13 per cent or 15 per cent back,” said Barlow. “That is a long way from being the objective of what farmers and Canadians have been told is that the carbon tax is revenue-neutral.”

Barlow also said farmers are having to pay to transition but an alternative fuel source does not exist.

Ontario Liberal MP Ryan Turnbull noted the Pembina Institute told the committee that the carbon tax on grain drying isn’t as high as farmers say it is. Jovanovic said it is variable, hence the $820 average rebate.

He said added costs, or price signals, are required to encourage behavioural change.

But NDP agriculture critic Alistair MacGregor suggested the government gave up on incentivizing change when it passed the original Bill C-74 that imposed the carbon tax. He said the government recognized there were no commercially viable alternatives so included the exemptions for on-farm fuel use.

“Are there not other financial tools and other ways that the government has at its disposal to incentivize change in behaviour while they recognize that there are no commercially viable alternatives?” he asked officials.

Jovanovic said the best tool is still a price on carbon.

The committee also heard from Ontario Conservative MP Ben Lobb who sponsored C-234.

He said an exemption for barn heating is critical.

A hog farmer in his region was billed $8,473 from Enbridge for gas to heat his barn.

“The carbon tax, it was an astonishing $2,918,” he told the committee, adding that there is HST on top of that.

He said the rebate falls far short and C-8 asks farmers to be the government’s line of credit.

“The farmer is currently the government’s line of credit for business risk management programs like AgriStability,” Lobb said.

He agreed that farmers should consider other technologies, such as biomass powered grain dryers, but he said traditional techniques will be required for at least the next 10 years.

He described the rebate as a “pittance” and said farmers aren’t recognized for the environmental good that they do such as sequestering carbon and taking care of riparian areas.

“They do all that almost for free and they get nothing in return,” he said.

– This article was originally published at The Western Producer.