Province plans to defy federal government demand for $50 a tonne price on carbon

Manitoba's Progressive Conservative government will announce a carbon tax of $25 a tonne Friday to be implemented sometime next year and keep it at that rate, a government source familiar with the file confirmed to The Canadian Press.

The source, who spoke on condition of anonymity because they were not authorized to speak on the record, said the province will refuse to follow federal government demands to raise the tax to $50 a tonne by 2022.

The source confirmed the $25 number first revealed in a draft document obtained by The Canadian Press last month, which said a $25-a-tonne tax would raise $250 million annually for the province.

The change should add about five cents a litre to the price of gasoline, the source said, and also apply to natural gas and other items, but not hydroelectricity.

Premier Brian Pallister refused to confirm details of the carbon-pricing plan Thursday. He told reporters the plan will be revealed Friday and will include a method for demonstrating how the tax will help reduce emissions.

"There's going to be the opportunity for people to see how we're doing," Pallister said.

The federal government wants the provinces to start with a $10 per tonne tax next year that would ramp up to $50 a tonne by 2022. If a province refuses, the federal government has said it will impose the tax and hand over the collected money to the province.

Saskatchewan is the only province that has threatened to not impose a carbon tax at all.

Pallister has long said he supports the idea of carbon pricing but the $50 amount is too high, and Manitoba should get credit for the billions of dollars it has spent developing its clean-energy hydroelectric system.

Pallister released a legal opinion from a constitutional law expert earlier this month that said Ottawa has the right to demand or impose a carbon tax, but the province might be able to defend a lower price in court if it is as effective as the federal plan in reducing emissions.

"I know that people don't want to pay more taxes ... but the fact of the matter is, if we just say no, we are going to get the federal plan introduced," the premier said Thursday.

There will be public consultations on how Manitoba will spend its money, the source said possibilities include income-tax reductions, energy rebates, investments in green-energy technology and flood-prevention infrastructure to mitigate the effects of climate change.

One possible example of green-energy technology, according to the document obtained by The Canadian Press last month, would be financial aid for municipal transit services to switch to electric buses.