The GNWT has shared some more detailed information on the changes that were just made to the Carbon Tax.
After their initial announcement that the NWT Carbon Tax would be coming to an end on April 1st, the GNWT has provided some more in-depth information on how these changes are being made, and what kind of impact they will have on the wallets of Northern residents.
When asked about the specifics of how fuel prices will change now that the Tax has been dropped, a representative with the GNWT explained that the carbon tax rate on gasoline is currently $0.1761/litre and becomes $0.1849/litre when the GST is factored in. The carbon tax rate on motive diesel fuel is currently $0.2139/litre and $0.2245/litre when including the GST but there is no carbon tax on diesel heating fuel. The propane carbon tax rate is currently $0.1238/litre and $0.1299/litre including GST. The natural gas carbon tax rate is currently $0.1525/cubic metre and $0.1601/cubic metre including GST.
They added that there is not expected to be any direct price change for diesel heating, since it was not subject to the Tax. However, all other things being equal, with the removal of the carbon tax the estimated retail price declines will be 18.49 cents/litre for gasoline, 22.45 cents/litre for diesel motive fuel, 12.99 cents/litre for propane and 16.01 cents/cubic metre for natural gas. However, this direct effect on fuel prices will not be exact as other factors influence retail fuel prices such as inventory costs and retail mark-ups. Carbon tax is only one component of the retail fuel price.
The direct decline in fuel prices, especially for fuels used in transportation, should indirectly reduce other prices. Transportation fuel costs will decline with the removal of the carbon tax, which may indirectly reduce prices of food and other goods brought into the territory. These effects are expected to take some time to realize, and could even be masked by other economic factors.
Since April 1st, the only remaining entities in the NWT that will still be paying the Carbon Tax are the three diamond mines, as they are the only facilities in the Territory that are classified as large emitters.
As for the legislative side of the matter, the NWT Income Tax Regulations have been changed to remove the Cost of Living Offset effective July 1st, 2025. However, the carbon tax legislation is still in force and will not be repealed until the federal government repeals its carbon tax legislation.
The plan is to introduce a bill in the May 2025 Session of the Legislative Assembly to repeal both the territorial carbon tax and the Cost of Living Offset with a Coming into Force date to be determined. In this way the NWT carbon tax can be repealed entirely when the federal government repeals the federal carbon tax.
