Sask. refusing to pay carbon levy on natural gas will end up costing families more, economist says

An assistant professor of economics at the University of Regina says most Saskatchewan families have been getting more money back from carbon rebate cheques than they’ve paid in carbon tax.

In an announcement earlier this week, the Government of Saskatchewan declared it would not remit the carbon tax on natural gas used for home heating for the month of January.

The province has claimed Saskatchewan families will see $400 in savings annually if the decision is carried through the year.

Saskatchewan’s standoff on the issue was spurred after the federal government instituted a three year exemption from the carbon tax on home heating oil – which is primarily used in Atlantic Canada.

Brett Dolter says if it’s ever decided that Saskatchewan does not have to remit carbon tax on natural gas for home heating it would mean smaller rebates for residents.

“We know this year [the total rebate is] $1,500 for a family of four in Saskatchewan from this carbon pricing rebate, that’s going to be lower if we’re not sending that revenue to Ottawa,” Dolter said.

“We have to remember that the money that we send to Ottawa just doesn’t go up in flames in the centennial flame at Parliament Hill – it goes somewhere – it goes into those rebates.”

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Dolter added that saving $400 on natural gas bills is just an average, and the saving scenario is different for virtually every family.

“On average yes, its $400 less in natural gas. That’s going to vary by household,” he explained. “If you have a big house you’re going to have paid more, if you’ve got a small house and have done what you need to do to make it energy efficient you’re actually not saving as much.”

Dolter is involved in research which looks at how much people spend on carbon pricing. The research has showed most people receive more through rebate cheques than they spend.

“We find that when you factor in the rebate, most of the people in Saskatchewan are getting more back in that rebate than they pay in carbon pricing and that’s especially true of lower income households,” he said.

According to Dolter, among households with an average income of $20,000, 80 per cent have been getting more money back through rebates than they spend on carbon tax.

Dolter said the same goes for households with an average income of $50,000.

“Seventy per cent of those households get back more money than they spend,” he said. “Even all the way up to $125,000 average income, half of those households are still getting back more in carbon pricing rebates than they spend on carbon pricing."

• What happens to rebate cheques if Sask. stops collection carbon tax?

Dolter said to simplify, the less money that goes to Ottawa in carbon tax, the lower rebates will be.

“So we know when you put that carbon pricing revenue into the pool – 90 per cent of it goes to the rebate that’s given out per person,” he explained.

“There’s another 10 per cent that’s put into a fund that municipalities, universities, schools, hospitals they can apply in to get some money to fund emission reduction projects. So that might be making the University of Regina more energy efficient – putting in LED lighting, things like that. So that would be another chunk of revenue that won’t be available for those projects.”

It remains to be seen if Ottawa will stop sending Saskatchewan residents rebate cheques all together or if they will be reduced due to the lack of carbon tax being remitted for natural gas.

On Thursday, Natural Resources Minister Jonathan Wilkison said Saskatchewan people would no longer get a rebate.

A spokeswoman for Wilkinson later told The Canadian Press the impact on the rebates sent to Saskatchewan is dependent on what money Saskatchewan actually remits to the federal government.

However, the carbon levy is still being paid by Saskatchewan residents on other resources aside from natural gas – including gasoline, diesel and propane.