Rural leaders say a study that shows a potential $16-billion hit to Saskatchewan’s gross domestic product from a carbon tax is exactly why one shouldn’t be imposed.
The study, which was conducted by the University of Regina’s institute for Energy, Environment and Sustainable Communities and paid for by the province, examined the economic and environmental impacts of a tax. The analysis involved running several economic scenarios through detailed models.
Among its findings was that a $50 per tonne carbon tax would reduce the province’s GDP by $1.8 billion each year from 2019-30 and only reduce greenhouse gas emissions by less than one megatonne.
“This is a 1.25 percent reduction of Saskatchewan’s 75 million tonnes of emissions,” said Environment Minister Dustin Duncan.
Canada as a whole emits 704 million tonnes, he added.
The province has repeatedly asked Ottawa for its economic impact study of a tax, as agreed to in the Vancouver Declaration, he said.
“We have asked them to release what this would cost each Saskatchewan family, and we have asked them to provide details of any environmental analysis that shows this tax would actually reduce emissions,” Duncan said.
Nothing has been provided.
“Further research from the University of Calgary supports our government’s calculations that the average cost of a federal carbon tax would be more than $1,000 per year per Saskatchewan household,” he added.
Todd Lewis, president of the Agricultural Producers Association of Saskatchewan, said farmers have known all along that a fuel tax exemption alone, as exists in other provinces that already have carbon plans, wouldn’t be enough to cover their costs.
“Farmers are pretty good with a pencil and paper and we all know that there’s so many different pieces to our inputs, be it agricultural plastics or chemicals or fertilizers that aren’t included in an exemption,” he said.
“All those providers to us are able to put their costs back to the farmers.”
Duncan said the federal model doesn’t account for energy-intensive export-based economies like Saskatchewan. Exports made up 48 percent of the province’s GDP in 2017.
Lewis said agriculture’s exposure is greater because 80 to 90 percent of production is exported.
Saskatchewan Association of Rural Municipalities president Ray Orb said the study’s results were “shocking.”
He questioned how rural Saskatchewan could remain competitive under a tax.
“We lose our competitive edge in agriculture in this province and we’re in big trouble,” he said.
SARM has asked federal Environment Minister Catherine McKenna to visit the province this summer to see how agriculture works.
“We want to talk to her about this ridiculous way of taxing agriculture, putting us at an economic disadvantage when farmers are under duress already,” he said.
“It’s really disheartening that the federal government is not relenting.”
Lewis said communication between APAS and the federal environment ministry has been minimal for the last couple of years.
Orb also said SARM has questions about the potential billions of dollars in GST the federal government will collect on carbon taxes and what it will do with the money. Ottawa has always maintained the tax will be revenue-neutral.
Lewis added the net result of farmers being asked, or forced, to use less energy means less food production.
“I think we need to be careful about what happens when you put a policy like this in place,” he said.
Meanwhile, Saskatchewan continues its work on Prairie Resilience, its own plan designed to reduce emissions while protecting the economy and without a carbon tax. Duncan said performance standards are in development and details are expected this fall.
The government is also challenging the tax in court.