The Northwest Territories has floated the idea of a "revenue neutral" carbon tax designed to reduce the amount of greenhouse gas released by northern residents and businesses.

Such a carbon tax could apply to fossil fuels used for transportation, energy generation and home heating, and would be imposed in addition to the N.W.T.'s existing fuel tax, according to a discussion paper released by the N.W.T. Finance Department late last week.

"We're not, at this point, promoting a carbon tax. But we know it's one of the things that's out there, and we're looking for discussion and feedback," Finance Minister Michael Miltenberger told CBC last Thursday.

According to a CBC report:

How much a given fuel is taxed would depend on its carbon content, with heavier taxes levied on fuels that contain a higher carbon content.

Using an example tax rate of $10 per tonne of carbon dioxide equivalent emissions, the carbon tax would range from 1.54 cents per litre of propane to 2.61 cents per litre of jet fuel, according to the discussion paper.

"Based on the 2009-10 fuel consumption data, it is estimated that a N.W.T. carbon tax would generate $11.2 million in revenue at the above tax rates," it states in part.

The Northwest Territories does not have a provincial or Harmonized Sales Tax. The territorial government has been seeking revenue-generating options over the past two years.

However, any revenue generated by a carbon tax would flow back to residents and businesses in the form of tax credits or income tax reductions, according to the discussion paper.

British Columbia, Alberta and Quebec are currently the only provinces with carbon taxes.

Monte Paulsen writes about carbon shift for The Tyee.