Why the lax tax? Finance minister says Muskrat burden played role in carbon pricing

The federal government has accepted Newfoundland and Labrador'splan for carbon pricing, which comes into effect Jan. 1, the provincial government announced Tuesday.

The tax plan will be rather lax for the average consumer the temporaryfour-cent gas tax will be repealed, and replaced with a 4.42-cent carbon tax.

"The average consumer in the province, I mean if you're burning 150 litres of gasoline a week, you'll pay eight dollars a year difference than what you're paying today," said Finance Minister Tom Osborne.

Many industries will be exempt from the carbon tax, including aquaculture, agriculture and offshore exploration.

Osborne said the province was able to convince the feds the costof Muskrat Falls is too large for the taxpayers to handle another hike.

Another factor is the closure of the Holyroodgenerating station the largest greenhouse gas emitter in the province when Muskrat Falls comes online.

"The environmental impact [is]probably the only good thing for the consumers of this province, but we've been able to show the burden of Muskrat Falls," Osborne said. "Plus the fact that the province is going to be 98 per cent green energy after Muskrat Falls."

No carbon tax on home heating fuels for consumers

Under the plan,residents will not be taxed on home heating fuels, as they would have been under the federal plan.

The province's five-cent additional tax on diesel fuel will be replacedwith a 5.37-cent carbon tax. Both of the new carbon taxes equate to $20 per tonne, according to agovernment news release.

The provincial plan also includes exemptions to the carbon tax for off-grid diesel electricity generation, aviation fuel, interprovincialmarine transportation and municipalities.

Exemptions for some industries

For industry, a performance-based system for both offshore and onshore industries will help establish targets for greenhouse gas reductions.

Natural Resources Minister SiobhanCoady used the oil and gas industry as an example when speaking with reporters.

She said businesses will have to reduce emissions by six per cent in the first year of the plan, then gradually increasing by two percentage pointseach year until they reach a 12 per cent reduction.

If they cannot meet the targets, they'll have to pay up.

"So if, for example, an emitter does not meet those targets they choose to eitherput money into an emissions reduction fund or they can buy credits that will be available because of the Holyrood closure."

There will also be exemptions from carbon tax for agriculture, fishing, forestry, offshore exploration,mineral explorationand methane gas.

A press release by the provincial government says itwill also continue to partner with the feds to create green jobs and reduce the impact of climate change and climate emissions through initiatives like the Climate Change Action Plan.

The implementation of the provincial carbon plan is still contingent on the implementation of a national carbon pricing system.

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