Federal Regional Minister Greg Thompson was swift to remind the provincial Liberal government yesterday that a carbon tax would take a "devastating" toll on New Brunswick.

"Prices are high enough, and of course for a carbon tax to be effective, it has to be at least 50 cents a litre. Basically, it's just another form of tax," said the Conservative member of parliament, a day after New Brunswick's Finance Minister Victor Boudreau said the Liberal government will consider a implementing a carbon tax as part of its upcoming tax review.

"I guess it fits in with the Liberal philosophy, tax more, spend more," added Thompson.

And with sky-high gas prices already affecting everything from the price of home heating, to transportation, and food prices, Thompson noted that a brand new tax on gas would stifle the province's economy and impact New Brunswickers' lives.

"It would have a huge impact on rural areas, no question about it," said Thompson, who was visiting the New Brunswick Legislature to meet with agriculture leaders.

"It would have a huge impact everywhere, but particularly rural areas where we don't have the opportunity to use public transit, where there is no public transit. It would have a huge impact, a negative impact."

The Liberal government broke one election promise in its first budget by raising personal and business taxes across the board. The same government kept another popular election promise in that same budget by cutting gas taxes.

Boudreau's willingness to consider a carbon tax will be tempered by public consultation this summer, in which taxpayers will have a chance to comment on a soon-to-be released tax reform discussion paper.

While the carbon tax hasn't gone past the stage of the discussion paper, Thompson's experience on Parliament Hill shows him that carbon taxes are more than an academic concept. Indeed, the federal Liberal party has proven the contentious tax can end up in the realm of public policy proposals, even when taxpayers are crying for tax relief.

"A carbon tax is something that Stéphane Dion is talking about, but certainly we are not. A carbon tax would be devastating for all Canadians," said Thompson.

After refusing to comment on federal Liberal leader Stéphane Dion's musings on a nation-wide carbon tax, Boudreau reiterated yesterday the provincial government's contemplation of a new carbon tax, which would presumably present a double-whammy to taxpayers.

And Boudreau remained tight-lipped about his own position on a potential carbon tax when asked whether a made-in-New Brunswick carbon tax could extend as far as to include the sale of cigarettes.

In a statement about his government's forthcoming discussion paper on tax reform in the legislature yesterday morning, Boudreau again expressed his interest in exploring the carbon tax issue.

"The tax system should take into account the need to protect the environment and secure it for future generations."

On top of fostering sustainable development, Boudreau said the revamped tax system should also follow the principles of competitiveness, simplicity, balance, fairness, social development, fiscal responsibility, and neutrality.

It remains to be seen how those principles would apply to a new tax that would worsen the crunch being felt by New Brunswickers currently as they battle painfully high gas and energy prices.

Proponents of a carbon tax often stress that the impact on citizens can be offset by income tax cuts aimed at making the cut revenue neutral. Government would therefore put as much money back into citizens' pockets as it takes out.

However, critics of the tax cite examples where governments' revenues have swollen as carbon taxes boost energy prices, and note that the distortion in the distribution of resulting tax cuts can create winners and losers in the tax system. For example, critics say a senior citizen living in a rural area will be more negatively impacted by a carbon tax than university student who lives in a downtown apartment in a city that offers public transportation.

Regarding neutrality, Boudreau stated yesterday in the legislature that the "tax system should interfere as little as possible in personal and business decisions that impact investment and economic growth."

But David Coon, policy director of the Conservation Council of New Brunswick, says a "revenue neutral" carbon tax will not help the environment or reduce carbon emissions.

He says the only way a carbon tax can have a positive effect on the environment is if the resulting revenues are invested into environmental initiatives like renewable energy sources, construction efficiency programs, and public transportation.

"Neutrality is ridiculous. The point is that if you want to do something, we actually need to make some investments in things like converting our energy system over to one that is more environmentally sustainable."

A truly revenue-neutral tax could not theoretically accomplish any of those goals because government would not be accumulating any new revenues, said Coon.

He ridicules the idea that a carbon tax could somehow reduce energy consumption but won't be accomplished by skyrocketing gas and energy prices.

"If the expectation is that somehow that tax by itself is going to have any impact whatsoever on households, it will not. It will not have one bit of impact on households' consumption of energy," he said, noting that Efficiency New Brunswick's programs are already running on all cylinders.