Farmers’ Carbon Tax Savings Will be $80 Million a Year Less Than Expected Under Amended Bill: PBO

Parliamentary Budget Officer Yves Giroux waits to appear before the House of Commons Finance Committee on Parliament Hill in Ottawa on March 10, 2020. (The Canadian Press/Adrian Wyld)

A new carbon tax exemption bill passed by opposition parties to give farmers a tax break on fuel would deliver $80 million less than the MPs intended after amendments made by the Senate, the Parliamentary Budget Officer (PBO) says.

According to the PBO, with the Senate amendments, the proposed carbon tax emption would save farmers up to $27 million a year by 2025-2026, a stark contrast from the $106 million annually that the original version of the carbon tax exemption Bill C-234 had promised.

The bill passed third reading in the House of Commons in March 2023, and was passed by the Senate with amendments in December. The bill will now go back to the House for MPs to approve the amendments.

The Senate amendments removed carbon tax exemptions for fuels used in heating or cooling buildings for livestock or crops and shortened the bill’s duration to there years from eight, ending in 2026 instead of 2030.

The PBO originally estimated savings of $162 million per year by 2030 before the Senate modifications. The revised estimates don’t provide the value of savings for 2030.

The farm fuel exemption has been central to Conservative Leader Pierre Poilievre’s critique of the Liberal government’s carbon tax policy as he advocates for broader tax exemptions or the complete removal of the carbon tax to make farming and food more affordable for Canadians.

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In November, farmers’ groups and numerous Conservative MPs and senators convened on Parliament Hill and marched to the Senate, advocating for the passage of Bill C-234 to exempt certain farm fuels from the federal carbon tax.

Conservative MP and shadow Agriculture Minister John Barlow emphasized during a Nov. 21 press conference before the march the significance of supporting Canadian farmers against the detrimental effects of the carbon tax under Prime Minister Justin Trudeau’s government. Mr. Barlow highlighted the bill as a measure to mitigate the financial burden on farmers and reduce the cost of food for Canadians, explaining that it seeks to extend existing fuel exemptions to include cleaner burning fuels like natural gas and propane.

The legislation received backing from Conservative, NDP, Bloc Québécois, and Green Party MPs, along with some Liberals, and passed the House of Commons. However, its progress was stalled in the Senate due to amendments by senators that included limiting to three years, from eight, the extension of the carbon tax exemption for propane and natural gas used in agriculture.

Environment and Climate Change Minister Steven Guilbeault later said that he had held discussions with “half a dozen” senators to advise them that the government is opposed to the bill. He said it was “more of a conversation” rather than a “lobbying effort.”

The House of Commons initially passed the bill by 176 to 146. However, Mr. Poilievre has expressed concerns about whether the bill will be passed in the House with the Senate’s amendments or will require further deliberations between the two chambers.

“The Senate, under duress and pressure from the current prime minister, then sent [the bill] back with unnecessary amendments. Now the other opposition parties are flip-flopping and wavering,” said Mr. Poilievre in January.

Defending his government’s position, Mr. Guilbeault has said that “the price on pollution in the agricultural sector only applies to three percent of fuels that are being used, where alternative technologies are available.”

The Canadian Press contributed to this report.