N.W.T. scrapping consumer carbon tax following federal cancellation

The Northwest Territories is cancelling its consumer carbon tax following last week's federal decision to kill the measure.

The N.W.T. is one of three provinces and territories that has its own carbon tax legislation, something finance minister Caroline Wawzonek said would allow the territory more flexibility to adjust how the tax is applied to northerners. That means that federal changes don't automatically change the territory's legislation and the N.W.T. needs to undertake its own process. 

The change comes into effect April 1 with residents to receive their last quarterly cost of living offset (COLO) payment in April. 

The government isn't able to repeal the Carbon Tax Act since the legislature isn't in session. Instead it's making changes to set the tax value to zero — effectively ending the tax without formally repealing the act. 

Carbon pricing has been heavily criticized for punishing Northerners who don't have more ecological alternatives for heating their homes, despite COLO payments that some politicians say has reimbursed residents "significant amounts". 

Cancelling the tax will mean a drop of about 20 cents per litre at the pump, about 20 cents per litre.

If gas prices are $1.629/litre — as they were at one Yellowknife gas station March 18 — without the $0.176 tax, consumers will pay $1.45/litres.  

In February 2024, the territory announced a carbon tax exemption on diesel for home heating fuel. For those who heat their homes with propane, they'll save about $0.123 per litre without the tax. 

But changes also means residents will no longer receive rebates. 

Those payments came four times a year in July, October, January and April with a tiered system that has residents furthest north receiving the highest offset payment. 

A family of two adults and three children in Paulatuk, for example, had been receiving quarterly deposits of $2,542, which it will no longer receive after the final payment in April. 

The Government of the Northwest Territories had also expected to earn about $97.5 million in carbon tax revenues. In the 2023/24 fiscal year, the territory collected $68.7 million. It used the revenue to invest in emission-reduction projects with some of that money distributed to communities helping to reduce property tax hikes in Yellowknife. 

Revenue from the tax has also helped pay for a 3.5-megawatt solar plant at Diavik Diamond Mine through the large emitter grant program.    

MLAs have voiced concerns and critiques of the tax since it was introduced saying it makes life less affordable for residents, especially those in smaller communities.