Thank you.
Thank you for the opportunity to appear today concerning private member's Bill C-234, which seeks to remove the fuel charge on the use by farmers of natural gas and propane for heating and drying activities.
The Greenhouse Gas Pollution Pricing Act, the GGPPA, currently provides upfront relief from the fuel charge to farmers for gasoline and diesel use in eligible farming machinery, such as farm trucks and tractors. The GGPPA also provides relief of 80% of the fuel charge for natural gas and propane used to heat an eligible greenhouse.
Private member's Bill C-234 would expand fuel-charge relief to farmers by modifying the definition of eligible farming machinery to include grain dryers and property used to heat or cool a building or similar structure. It also seeks to expand relief by adding natural gas and propane to the current list of qualifying farming fuels.
Private member's Bill C-234 is being studied while, on June 9, another government bill, Bill C-8, received royal assent.
Recognizing that many farmers use natural gas and propane in their operations, Bill C-8 introduced a refundable tax credit in order to return a portion of fuel charge proceeds to farm businesses operating in backstop jurisdictions—Manitoba, Ontario, Saskatchewan and Alberta—starting with the 2021-22 fuel charge year.
If fuel charge relief for farmers were extended through Bill C-234, farmers in backstop jurisdictions would receive double the compensation by benefiting from the refundable tax credit included in Bill C-8, while also being almost fully relieved from the fuel charge. Such double compensation would come at the expense of households or other sectors in those provinces.
Through the refundable tax credit, the total amount to be returned is generally equal to the estimated fuel charge proceeds from farm use of propane and natural gas in heating and drying activities in backstop provinces. This ensures that all the proceeds collected from this farming activity are returned to farmers. It is estimated that farmers will receive $100 million in the first year, with this amount expected to increase as the price on carbon pollution rises.
The refundable tax credit is designed to allocate total fuel charge proceeds according to farm size, as measured using total farm expenditures. In this manner, the credit aims to help farmers transition to lower-carbon ways of farming by providing support to farmers, while also maintaining the price signal to reduce emissions.
This is a different approach than that proposed in private member's Bill C-234. Bill C-234 would directly relieve fuel charges on natural gas and propane used in eligible farming activities and thus would completely remove the price signal intended by the carbon pricing regime.
I would like to conclude by noting, as mentioned already, that I'm joined today by my two colleagues, Jenna Robbins and Gervais Coulombe. We would be very happy to answer your questions.
Thank you.