Yukon Party calls for Northern carbon tax exemption

Yukon's Liberal government is at odds with a decision by Canada's Liberal government.

Yukon Finance Minister Sandy Silver said Monday Ottawa's decision to stop collecting the carbon tax on home heating fuel across much of the country is a mistake that will undermine the climate benefits of carbon pricing.

"We need to be stalwart with our approach to fighting climate change," Silver said in Question Period. "Carbon pricing is the most cost effective manner in which we can do that as a nation and as a region. We need to keep moving forward because I don't want to see taxpayers paying for forest fires and floods [caused by climate change]."

Silver described the changes as "regional-specific caving" by the federal Liberals. 

Meanwhile, Yukon Party Leader Currie Dixon said Ottawa's climbdown on home heating fuel means further changes to the policy are possible. 

Dixon said that means the territories should demand their own total exemption from carbon pricing, which he claims is driving inflation in the Yukon that is well above the national rate.

"The simplest thing to do would be get rid of the carbon tax altogether for the the entire Canadian North," Dixon said.

Ottawa's decision to pause the carbon tax on home heating fuel is worth around 17 cents per litre. It comes after aggressive lobbying by Liberal MPs in Atlantic Canada. They also won an increase to the carbon tax rebate, and an increase to subsidies for electric heat pumps that, for now, applies only in Atlantic Canada.

Eric Adams, a professor of law at the University of Alberta who has written a paper on the impact of carbon pricing on provinces and territories, said the federal Liberals are undermining their own climate policy

"As soon as the the [federal] Liberals said, 'OK, that's a good point, let's give you a break on that,' then there's no more argument for why we're not doing that for other people in other regions of the country," he said. 

Adams said carbon pricing makes up only a small part of the inflation that has taken off since Russia's invasion of Ukraine in February 2022.

And he said even though carbon pricing is a political lightning rod, it remains the most efficient way to reduce greenhouse gas emissions over time. The grim alternative, he said, is to absorb the increased costs of climate-related disasters.

"There's no free lunch," Adams said. "We're going to have to pay for the kinds of impacts that greenhouse gases are having in our economy and on our lifestyle."