Yukon finance minister calls for wind-down of federal carbon levy, cancellation of April 1 increase

The Yukon's finance minister wants Canada to start winding down the consumer carbon levy in the territory in anticipation of the country's next prime minister scrapping, freezing or substantially changing the program. 

The federal Department of Finance, however, says it won't "speculate" on the program's future. 

In a letter to Ottawa as well as a public written statement this week, territorial Finance Minister Sandy Silver noted that "all leading candidates" in the federal Liberal leadership race "have expressed their commitment to end or change the consumer carbon levy, if successful." 

The leaders of the federal Conservative Party and NDP have made similar promises, "indicating that it is highly unlikely that a carbon price will be in place following the next federal election."

"Given this impending change in policy direction, I am writing to encourage you to begin winding down the federal carbon levy in the Yukon," Silver wrote in the letter, addressed to his federal counterpart Dominic LeBlanc as well as Environment and Climate Change Minister Steven Guilbeault. 

Silver also called for the planned April 1 levy increase to be cancelled. 

In an interview, Silver said he was looking for certainty from Canada, given that the Yukon has a specially-tailored rebate program.

The federal carbon levy is applied in the Yukon at the point-of-sale for fuels like gasoline and diesel, with the money then returned to the territorial government. The Yukon rebates that cash to local residents, businesses, First Nations and municipal governments every year, with the promise that they'll get back more than what they paid in.  

"When we make those [rebate] estimates in November, we are assuming that this carbon pricing is continuing —  it's not, so we're looking for that certainty and we're looking for it sooner than later," Silver said.

"The federal government should be working with us to make sure that these changes don't have Yukoners being left behind." 

Silver added that while the Yukon has had issues with how Canada has applied the levy — including when the federal government forced the territory in 2022 to amend its mining rebate, or risk losing its carbon pricing transfer — he was still "deeply disappointed" about its ostensible demise.

"That results in the loss of the carbon rebates revenues that have directly benefitted [Yukoners]," he said.

"As a Canadian who cares about the climate, I'm also interested in seeing the platforms of each of the political parties to see what they're going to do to address climate change."

'Inappropriate' to 'speculate,' finance department says

In an email, federal Department of Finance spokesperson Marie-France Faucher confirmed that the government had received Silver's letter, but did not address questions about whether the government would consider his suggestions.

"It would be inappropriate for the department to speculate on any potential or prospective changes on the federal carbon pollution pricing system," she wrote.

"The government continues to collaborate with provinces and territories in administering their income taxes and benefits or rebate programs under the Tax Collection Agreements."

Meanwhile, Yukon Party Leader Currie Dixon said the Official Opposition felt "vindicated" by Silver's request to wind down the carbon levy.

"For the better part of the past decade, we've been saying this was not the right policy for Canada and especially not the right policy for the Yukon … so we're certainly happy to see that announcement," he said. 

However, he added that the situation also creates a "number of questions," including with how future rebates will be handled. The Yukon government, he noted, had listed an anticipated revenue of more than $30 million from the levy in its last budget.

"We'd like to know what's going to happen with that money," Dixon said, "and how will this so-called wind-down affect Yukoners and their pocketbooks."