Lloydminster reacts: Alta.'s carbon tax arrives in a city that's half in Sask.

As an energy-producing community that straddles the border between Saskatchewan and Alberta, the city of Lloydminster is waiting to see how Alberta's new carbon tax will affect its economy.

Business community concerned about impact on fuel prices, energy-driven economy

The business community in Lloydminster, which straddles the border between Alberta and Saskatchewan, is waiting to see what impact Alberta's new carbon tax will have on its energy-driven economy. (CBC Radio-Canada)

As an energy-producing community that straddles the border between Saskatchewan and Alberta, the city of Lloydminster is waiting to see how Alberta's new carbon tax will affect its economy.

Historically, the city has been a special case when it comes to taxes.

Saskatchewan sales taxes don't apply at businesses located in that province, a measure agreed upon to help the local economy function despite the disparity in tax rates.  

But the inter-provincial city is not exempt from Alberta's new carbon tax, which has put a levy on all greenhouse gas-emitting fuels, at a rate of $20 per tonne, starting Jan. 1. That rate will increase to $30 per tonne in 2018.

Staying 'seamless'

That has some members of the business community worried that the new tax will create an imbalance in what they say is a "seamless" city.  

According to Rob Saunders from the city's chamber of commerce political action committee, fuel prices have levelled out since the new levy kicked in on New Year's Day.

Although he said they were "all over the map" on Jan. 1, fuel retailers on the Saskatchewan side have since raised their prices to match those on the Alberta side. On Thursday, the new tax had raised the price of gas by about 4.5 cents.

Saunders said the chamber of commerce is monitoring the situation.

Rob Saunders is a member of the Lloydminster Chamber of Commerce political action committee. (Trevor Bothorel/CBC News)

Early days

Ward Read, the chief executive officer of the Lloydminster Economic Development Corporation, agreed it's too early to tell what the new carbon tax means for his city.

He expects some long-term impacts for retailers whose oil comes from Alberta, and for those businesses that need to transport their products for sale.

"By the nature of our location ... our industries, to be able to sell, will be a little more carbon intensive," said Read.

​The owner of a Lloydminster-based wholesale fuel distributor said he's already hearing from clients that the carbon tax is pushing business to the Saskatchewan side of the border.

Reduced rate needed: business owner

Darren King owns Kings Energy Group, which sells diesel fuel, gasoline and lubricants to retailers.

He said the Alberta government should consider his city a special case.

King believes a reduction in the rate for Lloydminster businesses, rather than a full exemption, would be the best way to avoid any imbalances in the local economy.

Darren King owns wholesale fuel distributor Kings Energy Group in Lloydminster. (Trevor Bothorel/CBC News)

"There's always been good co-operation from the Saskatchewan government, who historically have had higher tax rates with respect to fuel," said King.

"They've always recognized that and foregone some tax revenue just to keep an even playing field. Our hope is that that same pattern is established on the Alberta side as well, now that the pendulum has swung the other direction."

Business impacts

Blaine Stephan said the increase in fuel costs had an immediate impact on the business he co-owns, Guardian Plumbing and Heating.  

"We're going to do our best to try to retain our costs at what they are, keep our service rates as competitive as possible with our competition here in town," he said.

"But eventually, we're all going to have to adapt to allow for the increasing cost of doing business."

He expects the tax rate could impact how much his workers drive and their charge-out rate for mileage.

Alberta Premier Rachel Notley said in December she expected consumers wouldn't notice significant changes in the price of goods. 

"I think it would take a little while and perhaps it won't trickle down at all," the premier said at the time.

"If you look at what the carbon pricing will do to the price of gasoline relative to the rate at which the price of gasoline changes week over week, you will see that it is just a fraction of that."

With files from SRC's Marc-Antoine Belanger