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NWT Carbon Tax Increase Coming in April

Caroline Wawzonek, Minister of Finance, recently announced a change to the territory’s approach to the NWT carbon tax system to align with new federal government requirements. The change includes the introduction of a bill to amend NWT carbon tax rates, as well as proposed changes to how the GNWT offsets the carbon tax’s impact on the cost of living and economic development.

On August 5, 2021, Environment and Climate Change Canada (ECCC) announced that the carbon price will increase annually by $15/tonne of carbon dioxide equivalent emissions, starting at $65 a tonne and rising to $170 a tonne by 2030. Other changes to the federal carbon pricing plan include new guidelines that prohibit carbon tax rebates that directly offset, reduce, or negate the impact of the carbon tax.

Minister Wawzonek tabled An Act to Amend the Petroleum Products and Carbon Tax Act to revise the NWT carbon tax rates schedule to comply with the new federal criteria. Following Legislative Assembly approval, other changes to the NWT carbon tax system will be done through regulations effective April 1, 2023. This includes discontinuing carbon tax rebates for heating fuel and the current rebate for large industrial emitters.

To help offset the loss of the rebate on heating fuel, the GNWT will increase the amount of the NWT Cost of Living Offset (COLO) per resident by $135. Starting 2023-24 annual COLO amounts will increase to $473 for each adult and $525 for each person under 18 years of age. The GNWT will replace the current carbon tax rebate for large emitters with a rebate tied to a facility-specific baseline.

The carbon tax will not increase until April 1, 2023, and all current measures under the NWT carbon tax plan, including COLO, point of purchase rebates on heating fuel, and large emitter rebates, will remain in place until March 31, 2023.

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