Carr backtracks from claim Ottawa is preventing provincial carbon-tax rebate

New Brunswick's environment minister has admitted he was wrong this week when he said Ottawa was forcing him to spend new provincial carbon tax revenue rather than rebate it to consumers.

Jeff Carr said on Wednesday the net two-cent tax that drivers will pay at the pumps starting April 1 has to go into a climate fund because the federal government requires it.

That's why he couldn't provide a rebate, like the federal carbon-tax system that the provincial version will replace.

"That's not what Ottawa allows us to do," Carr told reporters Wednesday.

"They want to see a portion go into a climate change fund, so that's what we are doing. If that wasn't there, if that piece wasn't there, we may or may not have rebated the whole thing, but that's really just hypothetical at this point."

But Moira Kelly, a spokesperson for federal Environment Minister Jonathan Wilkinson, confirmed to CBC News on Thursday morning that New Brunswick "is not required or mandated to put the money into a fund and has the latitude to rebate all of it."

'I misunderstood'

In a second scrum with reporters later on Thursday, Carr acknowledged the error.

"I actually honestly believed that it was a federal government requirement," he said.

"If I said they said we should have it in a fund, I guess I misunderstood or misspoke, but I guess really in the spirit of the exercise in general to reduce emissions, the money out of a carbon tax should go to climate initiatives and environmental projects, in my opinion."

In the 2018 election campaign, Premier Blaine Higgs said a Progressive Conservative government would ensure that a carbon tax would be revenue-neutral, meaning all money would be returned to taxpayers.

"We'll take that revenue and we'll offset other costs in energy, other taxes in energy," he said. "The idea of revenue neutral is people don't see more taxes as a result of it."

At the time,Higgs was talking about what he'd do if the federal government imposed its carbon tax backstop on New Brunswick, given the province's refusal to comply with Ottawa's requirements.

"We will indeed make it revenue neutral, which means the taxpayers of this province will not have an increased tax as a result of the federal government imposing it," he said.

Asked about that commitment on Thursday, Carr suggested reporters speak to Higgs about it.

After becoming premier, Higgs initially joined other provinces in their constitutional challenge against Ottawa's authority to impose its carbon tax on recalcitrant provinces.

But after the federal Liberals were re-elected last fall, the premier said he would respect the will of New Brunswick voters, who elected Liberals in six of 10 federal ridings.

The province proposed a new provincial carbon tax that Ottawa deemed acceptable last fall.

Carbon tax increase coming soon

The full tax required under the national climate plan rises to 6.6 cents per litre of gasoline on April 1, the same day New Brunswick's tax replaces the federal backstop which included a rebate program.

The 6.6-cent amount is the equivalent of $30 per tonne of carbon dioxide.

To comply with the 6.6-cent price requirement, the province will apply it at the pumps but will reduce the excise tax on gasoline by about four cents at the same time, leaving consumers to pay a net two cents per litre.

Carr explained this week that the four-cent reduction of the excise tax is like a rebate, leaving two cents to go into the climate fund.

But last year Carr angrily denounced any additional taxes being levied on consumers, citing the example of a senior living on a fixed income in his sprawling, mostly rural riding who must travel to Fredericton twice a week for medical appointments.

"She is not going to be able to survive for another year," the minister said at the time. "The federal government is telling her, 'we're going to charge you more so you drive less.' So what does she do? Stay home and suffer? That's unfair."

Now he says that New Brunswickers want the province to keep some of the carbon tax revenue and spend it on environmental initiatives.

"If we're going to reduce emissions, why not dedicate a portion of that money to a fund to do just that? The public is actually calling for something like that. They want to see that being done here in the province."

He also said that given some of the fund could be used for energy-efficiency programs for homeowners or to subsidize electric car purchases, "one could argue that that eventually be recycled back to the taxpayer."

Carr promised that the fund will be fully transparent, with regular reports of how much money it takes in and where it is spent.

The Opposition Liberals, who set up the climate fund while in government, said they weren't bothered by the PCs backtracking on full carbon-tax rebates.

"This is a dedicated fund that our government set up that would provide certain incentives and certain measurable outcomes, so I think it's very important that we have that," said Liberal environment critic Andrew Harvey.