Saturday, May 10, 2008

Will Canada vote for a carbon tax?

The news came this week, via one of those not-so-subtly leaked trial balloons, that Canada's Liberal Party may advocate a revenue-neutral carbon tax. It may seem like political suicide for embattled Liberal leader Stephane Dion to even casually mention a tax on fuels at a time when gas prices are soaring. The Canadian political pundits I've heard have used the example of the way northern BC communities and opposition parties responded to the BC government's upcoming carbon tax, a tax that will add only 2 to 7 cents per litre at the pump, less than the price of gas increased in the past week at the Esso station down the street from my house!

That's why we need fewer political pundits.

Is there a better time to redirect federal tax code to stress fuels, rather than income? The signals are all pointing in that direction. Cars are outselling trucks and SUVs for the first time in years. Goldman Sachs reported this week that oil could reach $150 to $200 a barrel. Public transit usage is on the rise. A carbon tax on transportation and heating fuels would only further nudge our economy towards higher energy efficiency and lower per capita greenhouse gas emissions. Most importantly, even if 100% revenue neutral the tax will allow the government the political room to direct revenues to programs to further invest in energy efficiency, renewable energy and new technologies.

As for the politics: evidence from the US primaries, where Hillary Clinton's obvious pandering over a gas tax holiday appears to have sunk what was left of her presidential campaign, that people do appreciate honest on the complex issues of today. Dion is in the strange position of being seen by Canadians as "weak, uninspiring and unintelligible" but still more likable than PM Stephen Harper. Voters across the spectrum might just respect Dion more for making seemingly risky and groundbreaking political move of pushing for a carbon tax.

But, hey, I'm no pundit.


bigcitylib said...


Whatever the Lib plan winds up being, it will not affect gas prices but be added to other fossil fuel products. Its right there in the freaking Globe article that started all the speculation.

Its definitely political suicide if people are that stupid to believe the opinion about the news over the the news itself.

Simon Donner said...

Uh, yeah... that's the whole point. The problem is perception of the policy, not the policy itself. The primary objective of the carbon tax is to encourage efficiency and redirect spending, not to raise more tax revenue. So, yes, the proposed tax would have no effect on gas prices. The political problem is framing. Thanks to years of anti-tax lobbying and sentiment, is that people associate a carbon tax with higher gas prices, higher taxes, etc. I'm with you, I hope everyone reads and trusts the actual proposal. But just hearing the term "carbon tax" seems to stoke fears. Look at the opposition in BC. The provincial NDP -- the NDP! -- is stirring opposition to the very small carbon tax by labeling it a gas tax.

Whatever the details of the proposal, overcoming the perception will be Dion's challenge. Hopefully, he, or someone, will succeed.

Anonymous said...

Just talk about the gasoline price, BC is adding 2.4 cents to the gas price already because of this carbon tax. The carbon tax starts at a rate based on $10 per tonne of carbon emissions and rises $5 a year to $30 per tonne by 2012. The tax works out to an extra 2.4 cents a litre on gasoline, rising to 7.24 cents per litre by 2012.

If you guys like high gasoline price, high fuel cost for airplane, high transportation cost for truckers, higher cost for manufacturers and factories, all these prices will add to the end product that we consume, all will come back to us as end consumers... this definitely will hurt the economy with inflation, or stagflation with no growth, if you like this then go ahead and vote for the carbon tax.