June 7, 2007 / 8:36 PM / 13 years ago

Quebec to apply Canada's first carbon tax

MONTREAL (Reuters) - The Quebec government plans to begin applying Canada’s first carbon tax this fall to help fund its plans to reduce emissions of greenhouse gases that cause global warming.

The cabinet for Quebec’s minority Liberal government approved the tax, which will apply to some 50 companies, including Petro-Canada and Imperial Oil Ltd., and other energy producers such as Hydro-Quebec that use hydrocarbons.

For motorists, the tax amounts to 0.8 Canadian cents for each liter of gasoline.

The tax, proposed more than a year ago, takes effect October 1 and will be applied on other hydrocarbons at different rates, including per-liter taxes of 0.9 Canadian cents for diesel fuel and 0.96 Canadian cents for light heating oil, as well as C$8 a metric ton for coal.

Quebec’s Natural Resources Minister Claude Bechard said he hoped oil companies would absorb the tax rather than pass it on to consumers, but analysts said they expect retail prices to rise.

Retail gasoline prices ranged from C$1.09 to C$1.16 a liter in Quebec on Thursday, according to government survey information.

The estimated C$200 million ($188 million) of annual tax revenues brought in by the new levy would be used to fund the provinces plan to cut greenhouse gas emissions and improve public transit.

Three companies, Petro-Canada, Ultramar and Shell, operate refineries in Quebec, and the province has some 1,500 gasoline retailers.

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