Carbon tax scheme slammed

SASKATOON, SASKATCHEWAN - The war of words over the environment heated up with Prime Minister Stephen Harper saying the country would be "screwed" under Stephane Dion's carbon tax scheme.

Speaking in Saskatoon, itself booming with record oil prices, Harper pulled no punches when he described the Liberal leader's green plan, which includes a $15.4-billion a year carbon tax.

"(The carbon tax) is like the National Energy Program in the sense that the National Energy Program was designed to screw the West and really damage the energy sector - and this will do those things," Harper said.

"This is different in that this will actually screw everybody across the country."

The carbon tax would be worth $15.4 billion a year - to be offset by an equivalent cut in income and business taxes and a boost in tax breaks for poor, elderly, northern and rural Canadians, who stand to be hardest hit by the increased cost of necessities like home heating fuel, electricity, food and travel.

It would initially peg the price of greenhouse gas emissions at $10 per tonne, rising to $40 per tonne in the fourth year.

In Saskatoon with Harper, Saskatchewan Premier Brad Wall said the carbon tax could hurt that province's economic development.

Wall suggested such a plan could potentially force Saskatchewan back to "have-not" status once again.

"We're going to see wealth and opportunity and growth transferred under this kind of a fiscal tool from our province to elsewhere," Wall said.

"We will see the effective knee-capping of our economy.

"It's important for us to stand up and say look, this is going to come at a great cost to a part of the national economy that's working right now and working very well."

Dion's plan has been seen as an attempt to out-green all the other political parties.

It was unveiled recently and has been seen by some political experts as an attempt to win support on Canada's left wing.

It also attracted immediate criticism from Alberta Finance Minister Iris Evans, who called it an attempt to siphon dollars from Alberta to eastern Canada.

"This plan doesn't go after the automobile, but goes right after the way we look after heating our homes," she said.

"So you look at all of those with the luxury to be powered by hydro, and you know that they're not going to pay the penalty that Albertans will.

"Implementing this plan in Canada makes it less attractive to investment."

Ontario and Quebec rely mainly on hydro-electric power.

A local pro-development group is against Dion's plan because it could make Alberta, and Canada, less attractive to oil-sector investors.

"The things we have to worry about is maintaining a competitive environment in Canada," said Neil Shelly, executive director of Alberta's Industrial Heartland Association.

He supports Evans's comments that it unfairly targets Alberta's coal- and natural gas-fired electrical generation.

"We already have some of the highest electrical costs," he said. "This will have major regional differences across the country."

Dion's plan is expected to be a main part of the federal Liberals' election platform. It includes an income tax cut balancing the carbon tax increase.

While there are higher costs for home-heating oil, diesel fuel, propane and natural gas for homes heating, the Liberals say the plan targets heavy industry and power plants.