Wednesday, September 13, 2017

An idea to help balance Yukon's books: Stop subsidizing oil and gas.

The current Yukon Government realized they are going to be facing a $40-$60million shortfall (deficit) starting in 2018.  So they convened the Financial Advisory Panel to think up what to do.  This group did some online consultation this summer, which I did not hear about and missed the opportunity to provide input on.  Now they are doing consultation in the communities and an online survey (see

Here is my suggestion to help address this deficit:  stop subsidizing the use of oil and gas (propane).  This post is a bit of a work in progress as I mull through this idea, but I thought I’d get the idea out there now and update/revise this post as I think the matter through further.   If this topic piques your interests, please check back and I’ll provide more specifics.  

Based on my breakfast-table estimates this morning, I figure Yukon Government foregoes somewhere between $10million and $20million per year in revenues by subsidizing consumption of fossil fuels.  The perversity of these subsidies are:
  1. Yukon produces no oil or gas, so there are no benefits flowing to Yukon from these subsidies (increasing oil and gas consumption does not benefit our economy); 
  2. almost every dollar spent on oil and gas is a direct loss to the Yukon economy (all of those dollars are economic leakage and leave the Yukon); and 
  3. for most of the uses, we have made-in-Yukon cleaner, safer alternatives and solutions that would keep the money in the Yukon.
The Yukon subsidizes fuel usage in two ways:  firstly, Yukon has the lowest tax rate on gasoline in the Canada at $0.062/L. This is less than HALF the rate changed in any Province (lowest is Alberta at $0.13/L.)   That alone is worth $4million a year on tax revenue!  Secondly, Yukon offers tax exceptions on burning oil and propane for heating.  That means NO tax charged on these hazardous materials that are costing us a lot (for example spill cleanups, leaky tanks, heath-care costs, deaths by carbon monoxide poisoning, etc.).   Tax exceptions (which are subsidies) are also issued for commercial use such as mining.  Sure, there may be industries that we want to help support, but giving them a subsidy for how much fuel they burn is crazy.  Wouldn’t it be much better to give those vulnerable industries direct support that is in someway inversely proportional to their success?  These total tax breaks, based on the current tax rate of $0.072/L for diesel (which is what heating oil) is worth about $6million a year.  

I have a lot more specifics and details on this which I hope to write up and post here, but this is the gist of the idea now.  If you think this idea has merit and it seems wrong to your for government to raise your income taxes or cut service, but continue to subsidize burning of these dangerous and polluting substances, then please go to and complete the survey.  Participate in the public meetings if you can.

The Details:

Current Fuel Taxes