P.E.I. premier asks Justin Trudeau to pause upcoming carbon tax hike

Prince Edward Island's premier has asked the prime minister to call off a planned increase to the carbon tax next month.

In a letter to Justin Trudeau, Premier Dennis King wrote that the hike will hurt Islanders by further driving up their already high cost of living. 

The carbon tax hike, set to take effect on April 1, would add 3.5 cents per litre to the cost regular gasoline, and four cents a litre to the cost of diesel.

"Further driving up costs for Island households by increasing the price of carbon in April ... will create an untenable situation for many P.E.I. residents, especially our most vulnerable who will feel the economy-wide price increases," King wrote in his letter, which was provided to CBC on Friday. "With April 1 fast approaching, I am requesting the federal government urgently act and revisit any further increase."

The federal government introduced its carbon levy in P.E.I. in 2022. At the time, plans to put a price on carbon the province submitted fell short of what Ottawa had set as its minimum benchmark for reduced emissions.

With this upcoming tax increase, the overall carbon tax applied to fuel in P.E.I. would total 23 cents per litre for gas, and 26.6 cents per litre for diesel.

'Punitive and unfair tax'

During question period in the provincial legislature on Friday, King said the Island is more impacted by the levy than most provinces, because of how products have to reach P.E.I.

The Island gets almost all of its imports by diesel trucks, either by bridge or ferry.

"As an Island province we are in a unique position," he said. "With most goods arriving by diesel trucks ... adding to the cost of gas and diesel continually drives up the costs to goods, services, and food for Islanders." 

When the cost of fuel for deliveries increases, he said, the price tag is passed along to consumers. 

"There's a considerable amount of added tax that has … impacted Islanders," King said. "It's one of the reasons why our food prices are so high.

"When we don't have any other alternatives here, it becomes punitive and unfair tax."

The federal government has not yet responded to the premier's letter.

However, speaking in Parliament on Feb. 28, the prime minister defended his government's carbon tax increase, saying it would be largely offset by household rebates.

"Eight out of 10 Canadian households get more money than they pay in carbon pricing in the provinces in which it applies," Trudeau said. "That is money in their pockets.

"We are both fighting climate change and delivering more money to households across the country."

Trudeau made the remarks under questioning about the tax hike by federal Conservative Leader Pierre Poilievre.

"The tax hike will be bigger than increases in the rebate," Poilievre said, "and therefore the average families in all the provinces will be bigger net losers."

Feds exempted Islanders from heating fuel tax

The federal government says that 90 per cent of its revenues from the carbon tax are returned to Canadian households through a rebate program.

Ottawa spends the remaining 10 per cent as incentives for organizations to cut their fossil fuel consumption — such as municipalities, schools, businesses or other applicants.

Last year, the federal government offered households relief on the cost of home heating oil, at the request of Atlantic provinces' premiers.

Trudeau granted a three-year exemption from the tax for Atlantic Canadians, which came into effect last November.

King hopes he'll consider similar relief for Islanders worst-hit by the rising cost of living.

"I'd like to think the prime minister will at least entertain the request," King said.