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robert matas

"B.C. greenhouse growers are among the most innovative, technically advanced and sustainably managed producers in the world," says Agriculture Minister Don McRae, as he unveiled $7.6-million in support for greenhouse growers.

The B.C. government this week announced grants totalling $6-million to greenhouse vegetable growers this year and $1.6-million to those that grow flowers. The funds are "in recognition of the impact of the carbon tax on the natural gas and propane that greenhouse growers use for heating and carbon-dioxide production," states a news release from the Ministry of Agriculture.

The grants, announced in the midst of two hotly contested by-elections set for April 19, are in addition to previously announced measures that were to compensate all taxpayers for the carbon tax.

The new tax relief will in effect eliminate for one year the cost of the carbon tax for greenhouse growers on propane and natural gas.

The impact of the new grants plus the previous provincewide tax measures will vary by greenhouse. It was not clear Wednesday whether the total tax relief would cancel out the entire cost of all carbon taxes for greenhouse growers, such as the taxes on other fuels.

Greenhouse growers said the tax relief will enable them to be more competitive with producers in the United States and Mexico. But neither critics nor supporters of the carbon tax have endorsed the cuts.

Critics said the tax should be cancelled entirely; proponents were concerned that the government intended to do just that. Those who support the carbon tax questioned whether the grants to greenhouse growers were the first step on a slippery slope.

Matt Horne, of the Pembina Institute, said the announcement "sets a pretty bad precedent," opening the door for tax relief targeting several other businesses that could equally claim they are at a competitive disadvantage as a result of the tax.

John Martin, Conservative candidate in the Chilliwack-Hope by-election, questioned the timing of the announcement, which was just more than two weeks before the vote. Tax relief will be good news for greenhouse growers in the constituency, he said, adding that the constituency has several of them.

But he criticized the government for creating a bureaucracy to collect the tax and a second bureaucracy to give the tax back. The carbon tax hurts everyone, he said, and the government should have killed the tax.

B.C. is the only jurisdiction in North America that has a special tax on every type of fossil fuel. The grants for greenhouse growers were announced before the government completed a recently announced review of the tax's impact on the economy.

The tax will go up by 1.21 cents a litre at the gas station on July 1, for a total increase of 7.24 cents a litre since the tax was first introduced in 2008. In order to show the measure was not a tax grab, the government implemented several changes to return revenue collected from the carbon tax directly to taxpayers.

Businesses received compensation equivalent to around 50 per cent of the carbon-tax revenue. General and small business corporate income-tax rates were cut. School property taxes on farmland was reduced by 50 per cent. A training tax credit for business was extended and a small-business venture-capital tax credit was increased.

Under the new program, greenhouse growers with sales greater than $20,000 will receive an additional 4.2 cents per litre of propane and $1.37 per gigajoule of natural gas for fuel used last year. The payments are being made at a time that the price of natural gas has dropped to its lowest level in several years.

The carbon tax was intended to encourage a shift from the use of fossil fuels. However, the grants remove the incentive for business to rely less on fossil fuels. By providing the funds, the government may be undermining the innovation and sustainability that Mr. McRae is now celebrating.