Ottawa: Grit carbon tax would hit home fuel

The Liberals are poised to propose a "green shift" in taxation policy this week, saying Canadians are ready for bold moves to save the environment. Their proposed national carbon tax, to be phased in gradually over several years, would hit home heating fuel and electricity, but not gas at the pumps.

Liberal Leader Stephane Dion will attempt to armour his party against Conservative government efforts to stigmatize the plans as a tax grab with legislation requiring the auditor general to confirm annually that the impact is revenue neutral.

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That means billions of dollars collected in green taxes -- estimated between $12 billion and $15 billion annually -- would go back to taxpayers in the form of lower income and business tax, as well as incentives for technology to reduce greenhouse gas emissions.

"I think Canadians want strong leadership on the environment," Liberal finance critic John McCallum said in an interview Monday. " I think we can make a strong case that it's not only good for the environment but good for the economy, and that it's fair."

Seniors, low income earners, rural residents and others who could be hurt by the new taxes will be protected through a package of income tax breaks, exemptions and credits. The Liberals are expected to link these protections to their previously announced anti-poverty plan. Businesses will also be protected against green tax shocks.

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