The Conservative government painted itself green in its budget, with measures to promote efficient cars and renewable fuels, and to end a tax break for Alberta’s oil sands.
“Many of the most beautiful places on Earth are in Canada,” Finance Minister Jim Flaherty told the House of Commons. “We must preserve and protect it.”
But critics said the spending plan would have little impact on climate change or other environmental problems.
For consumers, the biggest news is the tax break on purchases of fuel-efficient cars and a penalty on gas guzzlers. The incentives will apply on cars that use less than 6.5 litres of gasoline for every 100 kilometres driven, and minivans or SUVs that consume less than 8.3 litres. The basic rebate on these vehicles will be $1,000 and will increase by $500 for every half-litre reduction, to a maximum of $2,000.
At the other end of the scale, vehicles that burn more than 13 litres per 100 kilometres will be hit with a penalty of at least $1,000. The payment will rise in $1,000 steps for every litre, until it tops out at $4,000 for cars that gulp more than 16 litres per 100 kilometres.
Pickup trucks are exempt from the provisions.
However, the impact of the penalty will be reduced because the government will drop its excise tax on heavy vehicles, which typically adds $500 to $700 to the cost of a big luxury car or full-size SUV.
Officials said the aim is to make buyers more aware of the environmental impacts of their purchases and encourage production of more efficient vehicles.
But critics said it would change little. “There is no policy other than to fool the public,” said John Bennett, executive director of the Climate Action Network coalition.
“It clearly doesn’t reflect the urgent need for action on climate change.”
The penalty on gas guzzlers applies only to about 5 per cent of passenger vehicles sold in Canada and, even then, “the average person buying a $40,000 SUV won’t care that much about an extra $4,000,” Bennett said. And, like last year’s tax break for transit passes, the incentive “isn’t great enough to do other than reward people who are doing something they would have done anyway.”
The Conservatives also moved to blunt attacks against subsidies to Alberta’s oil sands. The budget promises to phase out a tax break that lets oil companies quickly write off the cost of new and expanded operations. The incentive is to be eliminated between 2011 and 2015.
The tax break began 35 years ago, when oil prices were low and the oil sands were considered an experimental, risky investment. Now, prices are far above the cost of production and the industry is booming,
“With Canada’s oil sands sector now healthy and vibrant, the (incentive) is no longer required,” the budget states.
A similar tax break for producers of solar, wind and other renewable power sources is to be extended from 2012 to 2020 and expanded to alternatives such as wave and tidal projects, and solar heating for homes.
Critics noted that other incentives of about $1.2 billion aren’t touched and will likely increase because they’re based on how much oil is produced. Since the phase-out won’t begin until 2011, “the message to the industry is: `Get your shovels in the ground quickly,'” said Dale Marshall of the David Suzuki Foundation.
“If you think there’s boom in Alberta now, just wait for the next three years.”
The budget also includes aid for using fuels that reduce greenhouse gas emissions by replacing petroleum with oils from agricultural crops, wood waste and used fat.
Nearly $400 million is promised to protect Canada’s water supply.
But the $11 million earmarked for cleaning up the Great Lakes pales in comparison with $5 billion to $10 billion in proposals now before the U.S. Congress, said Aaron Freeman, of Environmental Defence. Canada’s plan, “is just a drop in the lake.”