Carbon tax foolish yes, but something is necessary

Posted on May 22, 2008
Filed Under Business, Politics |

CBC.ca: Carbon tax foolish and unnecessary: PM

“We think that is a foolish and unnecessary policy that is being proposed by our opposition.”
…
But Harper said the best way to reduce greenhouse gas emissions is through regulating large industrial emitters.
…
Harper said that in the 2004 election, the Tories committed to taking off 0.7 per cent off the excise tax on gasoline.
But he said after that election, they decided broader tax relief for consumers would be better for Canadians.
…
“We also concluded that the ability of a government to affect the price of gasoline per se is so small that it is not worth doing. What you really got to do is lower costs for consumers generally.”

Are carbon taxes foolish? Yes, for one reason alone. They are not sustainable for the government. By reducing other taxes and replacing that lost income with the gains from carbon taxes are a negative sum game. Say those carbon taxes get high enough to force big polluters to develop or implement more carbon friendly processes. Those carbon tax gains disappear along with the carbon emissions. The government’s petty cash box will get pretty bare.

The alternative is a cap and trade system. Problem here is that the big polluters will not be charged enough, at least for the first 5 years, to make some reductions cost effective. So the buying up carbon credits will just be a new cost of doing business. Problem is the carbon et. al. keeps getting pumped into the environment, while it takes the time for the price to go up. Once the price gets high enough though, emissions are reduced as above but it is not hitting the government’s revenue directly. Having all the polluting companies jump ship to China or India is another matter.

The current plan of Canada’s New Government (TM) is regulation in the form of politely asking big emitters to stop. Good luck with that.

With respect to the gas price relief, there should be none. It is about time the true cost of transportation was realised. Maybe now people will start walking their kids to school, buy local produce, and stop buying gigantic SUVs for a five foot momma to take little Billie to soccer.

And on the note of broader tax relief… GST cuts are not broad tax cuts. They are niche cuts for those that spend 5 times of more than people at the median.

Comments

Leave a Reply