Quebec to Bring in Canada's First Carbon Tax on Fuel

CanWest News Service | June 7, 2007
Kevin Dougherty

QUEBEC - Quebecers will be distinct from other Canadians in another way starting this fall: they'll have the country's first designated "carbon tax" to help fight global warming.

Natural Resources Minister Claude Bechard, who announced Wednesday that a 0.8-cent-a-litre carbon tax will come into force on Oct 1, added that he hopes the oil companies, which are reporting record profits, would absorb the tax and not pass it on to the consumer. Oil industry spokespeople were unavailable for comment late Wednesday afternoon.

The tax, Bechard said, is based on the "polluter pays" principle. "That is not negotiable," the minister said.

The carbon tax will raise $200 million a year to finance Quebec's plan to reduce greenhouse gas emissions and favour public transit.

Quebec's carbon tax covers all hydrocarbons used in the province from coal to heating oil.

The amount of the carbon tax varies according to the amount of carbon dioxide each fuel produces.

For gasoline, the tax is 0.8 cents a litre, the charge for diesel is 0.9 cents, for light heating oil 0.96 cents, heavy heating oil 1 cent a litre, coke used in steel making 1.3 cents a litre, coal $8 a tonne and propane 0.5 cents a litre.

Bechard noted that Ultramar, which operates Quebec's largest refinery, has said it would consider absorbing the new tax and had not made up its mind.

"We hope at 0.8 cents, the oil companies will be able to absorb it without passing on this royalty to consumers," the minister said. "Especially when you realize that refinery profit margins have gone in the last three, four months from 8 cents a litre to about 19, 20, 22 cents a litre."

Asked why he thinks the oil companies will absorb the carbon tax, Bechard said, "Well, we count on the goodwill of the gas companies." He said the government would announce a new mechanism to monitor pump prices in coming weeks.

Bechard has also threatened to impose a ceiling price on gasoline. Wednesday he said an announcement on that matter would be made in a "few days."