Quebec to collect nation's 1st carbon tax

Energy companies will pass cost to consumers, say analysts

Last Updated: Thursday, June 7, 2007 | 9:31 AM ET

CBC News

Quebec will implement Canada's first carbon tax in October, collecting just under one cent a litre from petroleum companies in the province, which will raise about $200 million a year to pay for energy-saving initiatives such as improvements to public transit.

The tax will amount to 0.8 cents on every litre of gas sold in Quebec, and 0.9 cents on each litre of diesel fuel.

About 50 companies will be affected by the tax.

Oil companies will be hardest hit. They will pay about $69 million a year for gasoline, $36 million for diesel fuel, and $43 million for heating oil.

Natural gas distributors will pay about $39 million, while electricity distributor Hydro-Québec will pay $4.5 million for its thermal energy plant in Tracy, Que.

Natural Resources Minister Claude Béchard said Wednesday he hopes the petroleum industry will pay the tax without passing on the cost to drivers when they fill up their cars at the pump.

"We all have a responsibility. Every Quebecer has a responsibility. It's important for every Quebecer. So I hope that all those companies will have the same sincerity that we have, that Quebecers have," Béchard said.

But Jean-Thomas Bernard, who teaches economics at Laval University, said the fate of the carbon tax is a foregone conclusion.

"It will end up being paid by the consumer."

Bernard said there's little any government can do to control the cost of fuel without triggering a shortage or an increase in the price.

Petroleum industry spokesman Carol Montreuil said there is no guarantee companies will swallow the tax, rather than tacking it onto the price of fuel at the pump.

"Is it possible that a company out there might decide not to pass it on? I think the answer is yes, it's possible."