Liberals plan on softening carbon tax because of competitiveness

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Canada is planning to scale back plans to impose a carbon tax on major emitters of greenhouse gases after businesses complained it would make them less competitive with the United States, officials said on Wednesday.

Canada's Prime Minister Justin Trudeau looks on at the start of the Climate Action Special Executive Session at the Commonwealth Heads of Government Meeting (CHOGM) in Valletta, Malta, November 27, 2015.

That includes the auto sector, which is the next possible target for President Donald Trump's tariffs, and breweries, who are paying more for their cans from the aluminum tariffs Trump has already imposed.

Canada's Environment Minister, Catherine McKenna, said the decision to soften the proposed plan was made after discussions with experts who pointed out that competitiveness could be hurt.

The carbon levy itself will not change, starting at Can$20 per ton in January and rising to Can$50 in 2022.

The government had initially planned to tax companies for emissions over 70 per cent of an industrial sector's average pollution intensity, but is easing the limit in most sectors to allow for emissions up to 80 per cent of the industrial average.

Under the federal plan, each province is allowed to create its own carbon pricing regime.

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The change only reduced the amount that heavy emitters or large corporations have to pay on emissions, but did nothing for Canadian households, said Moe.

FILE PHOTO: A resident views the first iceberg of the season as it passes the South Shore, also known as "Iceberg Alley", near Ferryland Newfoundland, Canada April 16, 2017.

"With the USA tax changes a year ago, the playing field has been very much tilted in favor of the United States when it comes to attracting manufacturing and capital", he said in an interview.

"We don't want to drive industry out of our country", McKenna said.

He reiterated that Ottawa's carbon tax policy is flawed and won't work in Canada if it hasn't worked around the world.

Official data shows Canada now has no chance of meeting its 2030 emissions reductions targets. This case is not even about whether a carbon tax is a good or a bad way to reduce the greenhouse gas emissions that fuel climate change. He said that while industries like lime and steel could benefit from the changes, the energy industry is Canada's key exporter and investment has declined domestically over the past several years, while it has risen recently in the United States, Canada's main customer and competitor. "We encourage them to take another step and remove this policy, re-engage with the provinces as they committed to on real solutions".