After facing severe political blowback over its carbon tax exemption on oil last fall, Ottawa is bowing to complaints for the second time and doubling rebates to First Nations governments.
Exemptions remain off the table for First Nations. However, in Tuesday’s budget, Ottawa went part of the way to meeting their demands by increasing the amount First Nations governments receive in carbon price payments to two per cent starting this year. For Ontario First Nations, that will mean a jump in reimbursement from $56.6 million in 2023 to $135.5 million this year.
The federal government had promised not to grant any more exemptions after announcing last October a three-year carbon tax exemption for home heating oil and larger carbon tax rebates for people in rural areas. Those measures were intended to provide relief amid the skyrocketing cost of living.
The Chiefs of Ontario (COO) launched a judicial review of carbon pricing last fall, alleging that the consumer fuel surcharge is discriminatory. The COO argued that indigenous peoples file taxes at a lower rate but are subject to higher federal carbon prices because remote communities rely on higher-cost fuels like diesel for energy, as well as capture, hunting and fishing.
The bosses have said Canadian National Observer that fuel prices in remote First Nations can be double or triple those in Canadian cities.
A full exemption for First Nations from the charge of carbon pricing for fuel is the “ideal world,” said Abram Benedict, grand chief of the Akwesasne Mohawk Council and leader of the carbon pricing file for the director of operations.
Benedict confirmed that the increase in carbon price payments for First Nations governments in Ontario was a prior request from the chief operating officer. It is not yet clear whether the amount will be enough to offset high fuel costs and demand for reserves across the province, particularly in the North, he explained in an interview with Canadian National Observer.
The chief operating officer argued that the previous collection of one per cent of total charges for First Nations in Ontario was “arbitrary and inadequate.”
Increasing the rebate to two per cent remains arbitrary, Benedict said, adding that it is difficult for Ottawa “to know exactly what is being taken away from First Nations communities” through carbon pricing.
Increasing the rebate to two per cent remains arbitrary, Benedict said, adding that it is difficult for Ottawa “to know exactly what is being taken away from First Nations communities” through carbon pricing.
The chief operating officer is now waiting to see how the funds will be managed, given the diversity of needs of First Nations in Ontario. Some First Nations have thousands of people, while others have hundreds.
Some First Nations in Canada may already receive an exemption, according to internal documents obtained by Canadian National Observer through the Access to Information Law. First Nations in provinces like British Columbia, which administer their own carbon pricing system, can “allow certain limited tax exemptions for First Nations under the Indian Act,” the documents say.
Ottawa is conducting an analysis of the impacts of the carbon price on First Nations, Métis and Inuit, which will be completed in 2026, a spokesperson for Environment and Climate Change Canada said. Canadian National Observer.
The amount of the rebate is linked to profitability increases for small and medium-sized businesses, also announced in Tuesday’s budget.