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7 things to know about the N.W.T.'s new carbon tax

The territorial government has released its plan for the federally-mandated carbon tax. Here are seven things to know about it.

Gas prices will rise, but flight prices shouldn't

Emissions are released from a smokestack at the Teck mining company's zinc and lead smelting and refining complex in Trail, B.C., on Nov. 26, 2012. The carbon tax in the N.W.T. will be introduced on July 1, 2019. (Darryl Dyck/Canadian Press)

The Northwest Territories government unveiled its version of the federally-mandated carbon tax this week.

The tax is meant to encourage businesses and residents to use fewer fossil fuels and lower their overall emissions. It's also supposed to generate some extra revenue to spend on green energy initiatives like windmills, dams, and solar panels.

But in the N.W.T., virtually all revenue the government generates from the tax will go straight back to taxpayers in the form of rebates.

Here's what you need to know.

1. Gas prices will rise

The carbon tax takes effect July 1, 2019 and, right away, you'll feel it at the pump.

The price for gasoline will jump by 4.7 cents per litre. Diesel will jump by 5.5 cents per litre.

The tax also increases over time, meaning that by 2022, the carbon tax will add 11.7 cents per litre to the cost of gasoline and 13.7 cents per litre to diesel.

In 2016, the Northwest Territories purchased just over 45.5 million litres of gasoline and just over 125 million litres of diesel. At those quantities, that works out to more than $22.5 million in new taxes by 2022.

Gas prices are one area where residents will notice the impacts of the carbon tax. The price of gas is expected to jump by 4.7 cents per litre in July 2019. (iStock)

2. Flight prices shouldn't go up

"Aviation is critical in the NWT," reads the government's policy, and that's why it's exempted aviation fuel from any carbon tax.

In a press conference, N.W.T. Finance Minister Robert C. McLeod said this exemption was the result of pan-territorial lobbying of the federal government.

"They recognized [a tax] on aviation fuel would be very costly for the Northwest Territories," said McLeod.

The territorial government said, in a press package, the exemption for airlines will save customers $6.4 million per year in new taxes.

3. Home heating bills shouldn't increase either

It's not just airlines that are getting a break.

While residents will see a line item on their heating fuel bill for the new carbon tax, it'll be immediately rebated at the point of sale.

You'll see how much you should be paying — you just won't have to pay it.

If you have electric heat, no need to worry. Your bills shouldn't go up either.

The Northwest Territories Power Corporation will still technically pay taxes on fuel used in its generators. But, like with home heating and aviation fuel, it's rebated to the corporation to keep prices down.

These rebates are expected to cost the N.W.T. government $12.4 million per year when the carbon tax is fully implemented in 2022.

Finance Minister Robert C. McLeod said the territorial government has done everything it can to mitigate the carbon tax's influence on the cost of living. (Gabriela Panza-Beltrandi/CBC)

4.  Diamond mines will pay — but not much

Big polluters — in other words, the territory's three diamond mines — will still see most of their carbon tax rebated, and all of it will eventually end up back in their hands.

For the mines, 75 per cent of the taxes they pay on non-motive fuels — fuels not used for transportation — will be rebated at the end of each year.

The remainder is held in individual company trusts for them to invest in green tech when they choose.

But where they'll really get hit is the same place as the rest of us: the gas pump.

The government estimates the mines will pay as much as $9 million per year in carbon tax on transportation fuels.

In 2011, the three mines paid almost $80 million in existing fuel taxes.

When Infrastructure Minister Wally Schumann was asked what the diamond companies thought of the tax, he said "all indications were they were quite pleased with [our] actions… to mitigate the costs."

5. You should be getting a new government cheque

To accommodate for the pain at the pump — and the general rise in prices that may result — the territorial government is introducing a new cost of living benefit.

At the beginning, it will be about $120 per year per adult and $160 per child.

By the time the carbon tax is in full swing, it'll go up to about $260 per adult and $300 per child.

"With some of the rebates, I think families are actually going to be ahead," said McLeod.

Officials said they would like to send the cheques out every few months, but the payment schedule has yet to be confirmed.

6. An N.W.T. carbon tax is unlikely to make much difference

When the federal government estimated the impact of a carbon tax on emissions in the N.W.T., it said it would cause a roughly 3.4-per-cent reduction.

In a territory that emits 1.6 million tons of greenhouse gases per year, that works out to about 54 kilotons — less than the emissions of a single diamond mine.

That number was also achieved by calculating the potential impact of the federal backstop — not the N.W.T.'s version, where most of the tax is being returned to the spender.

And the N.W.T. is responsible for a tiny fraction of Canada's emissions — less than Prince Edward Island. That means the global impact on climate change will be very small.

7. The territorial government doesn't want a carbon tax

The N.W.T. government said the high cost of living in the territory is enough of a disincentive to waste expensive fuel.

McLeod said the territorial government has done everything it can to "mitigate the impact to the cost of living."

He also said if a change of winds in Ottawa means carbon pricing goes out of style, he won't defend it in the N.W.T.

"A carbon tax is not something you want to implement on people in the Northwest Territories," McLeod said. "But because it's a federal initiative, we've met that head on and tried to mitigate the impact."

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