Tax cuts over carbon pricing up to province, Justin Trudeau says

Prime Minister Justin Trudeau says he'll leave it up to the New Brunswick government to decide whether to cut other taxes to make up for a carbon-pricing system likely to be announced this year.

At first, Trudeau touted his policy as one that will return carbon-price revenue to Canadians "who are the most vulnerable and the most in need of extra support."

But when he was asked about his Liberal ally, Premier Brian Gallant, choosing to keep most carbon-price revenue to spend on new environmental programs, Trudeau said that was up to the province.

It'll be up to the provincial government to determine how to best help people through this important transition.- Justin Trudeau, prime minister

"The issue we have on the federal side is to ensure revenues collected from the pricing of carbon remain in the province that collects them," the prime minister told reporters at a news conference in Fredericton.

"It'll be up to the provincial government to determine how to best help people through this important transition."

Trudeau said he met with Gallant on Tuesday morning to discuss a range of issues, including how a federal phase-out of coal use for generating electricity would affect NB Power's Belledune generating station.

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The federal phase-out means coal can't be used after 2030 unless the province negotiates a deal with Ottawa that would see equivalent emissions reductions happen elsewhere.

​Gallant's government has also raised the idea of finding an alternate fuel to burn at Belledune, including natural gas.

Trudeau said Tuesday he wants to ensure the coal phase-out meets Canada's climate change goals "and also ensures New Brunswickers … don't get unduly impacted."

That's why he said his government would ensure that any revenue from carbon pricing would be "returned" to the most vulnerable.

Other tax cuts ruled out

But Gallant's government hasn't committed to do that.

Its climate change plan, unveiled in December, says only that the province "will take into consideration impacts on low-income families" as well as on "trade-exposed and energy-intensive industries" when it figures out "how to reinvest proceeds."

Gallant has ruled out cutting other taxes and has also abandoned the phrase "revenue-neutral" in talking about how his carbon-pricing system will work.

And the premier said in the legislature in November that "all those revenues that would be raised would go back into the economy. They will be invested in things that will help us be as energy efficient as possible."

That includes energy-efficiency programs and other measures that would see government spending increase.

Carbon tax versus cap-and-trade

The New Brunswick government hasn't decided yet whether to adopt a carbon tax or a cap-and-trade system, which would see emitters that exceed a government-set cap forced to buy credits from other emitters that stay below the cap.

Gallant says that announcement will likely come this year.

Trudeau's government says it will impose a federal carbon-pricing system on any province that doesn't adopt its own scheme by 2018.

The Opposition Progressive Conservatives say they oppose a carbon tax. But the party's environment critic Brian Kierstead said in December it was "something we could look at" if the Liberals lowered other taxes by the same amount.