REGINA — Agricultural organizations that pushed hard for carbon pricing exemptions for farmers said the end of the consumer portion of Canada’s tax is good news.
New prime minister Mark Carney took office March 14 and immediately announced he was scrapping it as of April 1, the date it was set to rise to $95 per tonne. Canadians can still expect their final rebates in April.
Some are arguing the tax isn’t officially gone unless the law is repealed in Parliament, but cabinet can make regulatory changes and did so through an order-in-council. The carbon price on large industrial emitters is still in place.
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The House of Commons was set to open March 24, but Carney is expected to call an election before then.
The Canadian Federation of Agriculture said the move provides much needed relief for farmers.
“Farmers are being squeezed from seemingly all sides at once with inflation and tariffs from both the U.S. and China. The long-awaited removal of the carbon tax will provide farmers a bit of relief from this pressure and can be seen as recognition for the difficult place Canadian farmers and consumers find themselves in today,” said president Keith Currie.
The CFA and other members of the Agriculture Carbon Alliance were strong proponents of the private member’s Bill C-234, which would have exempted from the tax propane and natural gas used to dry grain and heat buildings. That bill passed in the Commons in 2023 but then became bogged down, and amended, in the Senate. There was no action on the legislation for the past year, and it is now moot.
The Parliamentary Budget Office had estimated farmers would save more than $100 million each year without the tax.
“The signing of this order-in-council is a reassuring step in the right direction, but we need to see Parliament reconvene and provide a long-term solution that removes the consumer carbon price from legislation and ensures farms of all sizes are exempt from the carbon price,” Currie said.
Saskatchewan premier Scott Moe was silent on the move, even though cancelling the tax was at the top of a list of priorities he sent Carney earlier.
His agriculture minister, Daryl Harrison, said it was the right thing to do but came too late.
Sylvain Charlebois, senior director of Dalhousie University’s Agri-Food Analytics Lab, said the most damaging aspect of the tax is still in place as far as food is concerned.
“Carney’s plan appears to shift toward what some call a ‘shadow’ tax system — continuing to tax major polluters in the same way as before. While this version of carbon pricing may be less visible to consumers, its economic impact is no different,” he said in an opinion piece.
Food affordability will still be a concern because the tax accumulates through the supply chain, he said, with everyone from farmer to trucker to processor to distributor paying along the way.
“By the time a loaf of bread reaches the consumer, multiple layers of carbon tax have been applied at different stages, increasing the final retail price,” he said.
Charlebois said there is also GST on that tax, pushing the price even higher.
He said since the tax was implemented in 2019 at $20 per tonne, it has made the agri-food sector less competitive. It has risen by $15 per tonne each year since 2022.
“Wholesale food prices appear to be putting even more pressure on retail food prices,” he said.
“In essence, this indicates that our sector’s competitiveness has been compromised.”
He added Ottawa should initiate a “real, evidence-based debate on how best to tackle climate change without compromising food security and affordability.”
New federal agriculture minister Kody Blois, also sworn in March 14, called the tax’s removal the right approach.
“I think it’s a really good move,” he told reporters.
“The prime minister has rightfully highlighted that this policy, although has merit from a carbon reduction side and of course was giving back rebates, had become very divisive and you saw our work from our Atlantic caucus over the years to get adjustments.”
He said he expected the decision would go over well across the country.
Farmers are largely exempt from carbon pricing, but the Bill C-234 debate highlighted the divisiveness and the disconnect between Ottawa and farmers. Blois was the only Liberal MP to vote in favour of the bill.
He also said his first phone call would be to Harrison in Saskatchewan to discuss Chinese tariffs on canola, peas and pork.
Harrison said the two did talk briefly. He said it’s positive that Blois has spent so much time in Saskatchewan.
“I urged him to encourage the prime minister as strongly as he could to engage with China first,” he said.
“At this point, China trade is more important than trade to France. If he had time to fly across the ocean, he had time to fly to China.”
That did not happen, but Harrison said he would also be willing to go on a trade mission with Blois and any others to resolve the tariffs that were to take effect March 20.
He said the canola crush sector in the province is at risk if the tariffs are in place.
Contact karen.briere@producer.com
