Ottawa rejects Higgs's carbon tax 'deferral' idea for bringing down gas prices

By proposing to suspend the provincial carbon tax for three months to help consumers cope with soaring gas prices,  Premier Blaine Higgs may be choosing the most complicated of several options.

Higgs said a "deferral" of the carbon tax would take 11 cents off the cost of a litre of gasoline.

But it's a change that would require the federal government's approval, since by law it's Ottawa that sets the rate, and that approval isn't coming.

Federal Intergovernmental Affairs Minister Dominic LeBlanc told CBC News the federal carbon pricing standard will stay the same and increase as scheduled at the end of this month.

"We have no intention of changing the planned increase to take effect on April 1," he said. 

He said while Ottawa establishes the rate, the Higgs government designed its provincial systems and has the flexibility to return more of that money to consumers.

"The New Brunswick government has a whole series of tools on its own to decide if it wants to do something about the price at the pump, but the federal carbon price increase will go ahead as planned." 

University of Calgary economist Trevor Tombe says the province should use other tools because a carbon tax cut is not the best way to give consumers a break.

He said it's better to simply send people cheques, allowing the province to target those who need the help most if it chooses to.

"The increase in the price of gasoline is a strain on some families and not others, and more targeted approaches–to ensure that those who need to support get it–may be much more effective for governments to pursue," he said.

The price of a litre of regular unleaded gasoline was hovering around $1.80 in New Brunswick on Wednesday morning, with much of the recent increase attributed to the invasion of Ukraine by Russia, a major oil exporter now being hit by sanctions.

Higgs told CBC News Tuesday he plans to speak to his fellow premiers Thursday about a deferral of the carbon tax that would save people 11 cents a litre.

The current rate is 8.8 cents a litre but it's due to increase to 11 cents on April 1.

Suspending the provincial gasoline tax, which is 10.9 cents per litre, would produce almost exactly the same savings for drivers at the pumps.