New Brunswick removed from federal fuel charge

Summary#

These final regulations (SOR/2020-261) remove New Brunswick from the federal backstop for carbon pricing under the Greenhouse Gas Pollution Pricing Act. Practically, that means the federal fuel charge stopped applying in New Brunswick as of April 1, 2020, because the province put its own carbon tax in place that the federal government found to be strong enough.

What it does#

• Removes New Brunswick from Part 1 of Schedule 1 and from Schedule 2 of the Greenhouse Gas Pollution Pricing Act, and deletes related wording in the Fuel Charge Regulations.
• As a result, the federal fuel charge no longer applies in New Brunswick beginning April 1, 2020.
• The change is recorded as final in the regulation titled Regulations Amending Part 1 of Schedule 1 and Schedule 2 to the Greenhouse Gas Pollution Pricing Act and the Fuel Charge Regulations (SOR/2020-261).

Who's affected#

• Primarily fuel producers and distributors operating in New Brunswick, because they are the businesses that pay the federal fuel charge when it applies.
• The Canada Revenue Agency and the Canada Border Services Agency, which administered and enforced the federal fuel charge, may see changes in how the charge is handled at the provincial level.
• Consumers, businesses and governments in New Brunswick could notice indirect effects through the province’s own carbon tax and how the province uses the revenue.
• Small businesses are unlikely to be directly affected by this federal change, because the federal fuel charge generally applies upstream to larger fuel suppliers.

Why it matters#

• The federal government removed the fuel charge from New Brunswick because the province implemented its own carbon tax that meets federal stringency requirements. That keeps a carbon price in place in the province, but under provincial — not federal — rules.
• The federal fuel charge schedule referenced prices of $30 per tonne as of April 1, 2020, rising by $10 per year to $50 per tonne in 2022; those federal rates are no longer applied in New Brunswick because of this change.
• How the provincial tax affects people depends on what the Government of New Brunswick does with the revenue (for example, whether it issues rebates or funds programs). The Gazette notes that impacts on low-income and vulnerable groups depend on that provincial design.