P.E.I.'s carbon tax kicks in April 1

A temporary reprieve in fuel taxes for Island drivers comes to an end April 1, as P.E.I.’s carbon levy comes into effect.

Fuel tax increase will more than make up for tax break brought in at the start of the year

A 4.4 cent per litre carbon levy on gasoline kicks in April 1, negating a 3.4 cent tax decrease implemented by the P.E.I. government at the start of the year. (Graham Hughes/Canadian Press)

A temporary reprieve in fuel taxes for Island drivers comes to an end April 1, as P.E.I.'s carbon levy comes into effect. That will negate a decrease in fuel taxes implemented by the province at the start of the year.

On Monday, gasoline taxes will increase 4.4 cents per litre, while taxes on diesel will jump 5.3 cents.

That comes after a drop in taxes came into effect on Jan. 1 of 3.4 cents for gasoline and 4.3 cents on diesel.

The new levy coming into effect Monday is at the same level as the federal carbon tax, but is being administered by the province. The levy also applies to other fuels including jet fuel and kerosene. 

Once the January decrease and the April increase are factored in, overall taxes on gas and diesel will have gone up one cent per litre as of April 1, with another increase of one cent to come in 2020.

Free drivers' licences

In November, the province announced how it would spend extra revenues from the additional cent per litre in fuel taxes, providing free drivers' licences, transit subsidies and reducing the cost to register a vehicle in P.E.I.

Those incentives kicked in Jan. 1, in the fiscal year before the carbon tax is scheduled to come into effect.

P.E.I. had initially told Ottawa it could reduce its carbon emissions without implementing a carbon tax. A letter tabled by Wade MacLauchlan in the P.E.I. Legislature shows the province submitted a revised plan for carbon pricing to Ottawa on Oct. 22, 2018 — the day before Ottawa announced in which provinces it was enforcing its federal carbon price backstop.

"We are disappointed that our original submission of September 5, 2018 was not accepted," the letter said.

The last-minute proposal shows P.E.I. committing to introduce a carbon pollution price, with exemptions for fuel used by farmers and fishermen, and for furnace oil and propane.

According to the letter, the last two exemptions "will undergo a review in 2020 to determine the path forward on carbon pricing for light fuel oil and propane."

Because P.E.I. is implementing its own carbon levy without having it imposed by Ottawa, Island households will not receive federal carbon levy rebate payments. Because of that, the Green Party has said P.E.I. would have been better off under the federal plan.

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