Carbon Tax – We’re Having the Wrong Conversations

With a federal Carbon Tax increase coming on 1 April, 2024, lots of people are talking about the tax itself. I think we’re having the wrong conversations.

First, a disclaimer or two:

  1. I don’t like paying taxes either. But I understand that taxes are valuable for a variety of reasons:
    • Without taxes we wouldn’t have roads, hospitals, various emergency services, schools, libraries, sewers, garbage collection, and a multitude of other institutions that support commercial investment, jobs, and a high quality of living.
    • Taxes can help shape behaviour by rewarding desirable behaviour and discouraging undesirable behaviour. We support a multitude of these taxes, tariffs, and incentives: Sin taxes on cigarettes and tax breaks on Oil & Gas development immediately jump to mind.
  2. I understand and am sympathetic to the challenges facing people in terms of the tremendous increase in costs for food, rent, and utilities. I have kids and parents who are struggling to make ends meet.
  3. We need to reduce emissions. The climate crisis is upon us. I won’t argue that point in this essay because it has been argued too much already. If you’re still uncertain, I suggest you spend some time with some bloggers like Katherine Hayhoe or Britt Wray or Hannah Ritchie.

Axe the Tax

“Axe the Tax” has become a rallying cry for a lot of people, led and encouraged by Pierre Poilievre.

Some of the folks listening to Poilievre believe their income taxes will go down, their mortgages will be lower, and their food bill will go down, and, oddly enough, that it protects their freedom (to burn oil, I suppose. Maybe they’d rather have the freedom to have lead in their paint too).

The conversation we’re not having is whether Poilievre has any alternatives in mind. As a life-long Parliamentarian, having served in government, I suspect he knows quite well that the world is facing an existential crisis. Not proposing an alternative to an important incentive to reduce emissions is, at best, lazy. At worst, it is pandering to people who are in economic straits who will not realize any savings in mortgages, income tax, food bills, or gain any more freedom when the tax is axed.

Many might be financially worse off when they no longer receive the rebates: some estimates suggest up to 80% of Canadians (in provinces that provide the rebate), get more money back.

Searching for Alternatives

This week, in speaking to a Parliamentary Committee on the Carbon Tax, Saskatchewan Premier Scott Moe said that they have looked at alternatives to the Federal Carbon Tax and found them too costly. Moe seemed to think this is justification to get rid of the Carbon Tax entirely.

All of them were costly to our industry, as is the federal backstop that we’re experiencing now, as well as costly to Saskatchewan families

Scott Moe, Premier, Saskatchewan, 26 March 2024

The conversation we’re not having here is that the Carbon Tax is a cost efficient method of reducing emissions. The conclusion Moe came to, that there should be no Carbon Tax, is faulty. The conclusion is that it is the most efficient and inexpensive to administer carbon pricing system available to us. Particularly, given that we need to have carbon pricing in place to avoid tariffs from other countries who are making efforts to reduce emissions.

One commonly proposed solution is that we might “tax polluters” by setting limits and then charging corporations who exceed those limits. That will require tax dollars to create the legislation, to hire inspectors, to enforce the limits, and chase down corporations who don’t pay their fines. And, as with other government-based inspections, such as food safety, we know that the CPC isn’t really interested in putting such an onus on corporations, trusting them to do the right thing. As we know, “Do the Right Thing” usually means putting profit and shareholder value before people and environment.

Scale is a problem, too – is the person commuting 20km to work every day in their F150 a “polluter”? How do we “make the polluter pay”?

The other problem with “make polluters pay” is that, at the end of the day, the corporations that make the product are producing it for one reason: to sell it, directly, or indirectly as a component, to consumers. This is the simplicity of the carbon tax – if the tax makes the carbon-intensive option more expensive, consumers will gradually shift to the low emission alternative.

Consumerism in Action

The Carbon Tax Challenge: April 1 2024 to April 7 2024, Do not buy gas or diesel for the week. Fill up on March 31 2024.

Internet Meme

Oh the irony. Protesting a tax designed to reduce consumption of fossil fuels by reducing consumption of fossil fuels. Clearly, the tax has the potential to change behaviour. Maybe it isn’t high enough?

We need to talk about this too; the Carbon Tax is easy picking for a protest because it is so visible. We know how much it costs. We know it is going up every year. And we know our rebates are going up every year. This means consumers, manufacturers, and retailers, will be able to make choices about the costs of production and purchasing based on that tax.

A “polluter pay” scheme is invisible. How would a consumer apply it to a choice of home heating system (oil, gas, electric, heat pump) or new car (small, large, ICE, EV, PHEV) when we’re punishing “polluters”? How do we encourage people to change behaviour when they aren’t aware of the costs.

We’re Already Paying More Than We Think

The Federal Government handed out $18 billion in subsidies to the oil and gas industry in 2023 and about $20 billion in 2022. That includes $8 billion in loan guarantees to build the Trans Mountain Pipeline. That includes tax breaks, loans, loan guarantees, and direct subsidies.

We’re literally paying a carbon tax to reduce emissions to turn around and give the oil and gas industry money to increase emissions. Maybe we should shift the costs of these to a new O&G tax so Canadians can be entirely clear about what our support for oil and gas is costing us.

These are hidden taxes that are not helping us reduce emissions but we’re willing to let politicians focus on the one tax we can see, the one that many of us, particularly folks living in poverty, benefit from.

Speaking of Politicians

Portage la Prairie MLA Jeff Bereza had this to say about the April 1 increase in the Carbon Tax:

Can customers of Manitoba pork stomach a 23 per cent increase in prices so that Manitoba producers can break even on the carbon tax?

MLA Jeff Bereza, 17 March 2024

The increase in the Carbon Tax is 23%, not an increase in fuel costs that is 23%. We probably should be talking about Mr Bereza’s math abilities. Or maybe we could have a conversation about not using fear and disinformation when discussing a very important issue.

The increase in the Carbon Tax on April 1 amounts to a 3.3 cent per litre increase. Considering gasoline is currently at about $1.39 per litre (with Manitoba’s gas tax holiday still in effect), the increase is relatively trivial.

Maybe we need to be having a conversation about how it is that Manitoba’s factory hog farms are producing so much emissions that a 3.3 cent increase in the gasoline tax will result in a 23% increase in pork prices.

We also need to be talking about Manitoba’s newly minted NDP government. I have to admit that I had high hopes that they would be the environmental champions that the PCs clearly were not. In some ways, they’ve had some successes, such as stopping the Sio Sands project.

But then they brought in a gas tax holiday from 1 January to 30 June 2024, reducing the Manitoba gas tax from 14 cents per litre to 0 cents per litre. Fuel prices have kept creeping up since that announcement – that increase isn’t coming from the Carbon Tax, but world pricing pressures. It is going to be a rude shock when the gas tax comes back.

The Bills are Coming Due

In the meantime, the things that the gas tax paid for still need paying for.

Anyone who’s needed critical care in the province recently will know that our healthcare system is in dire straights. The PCs brought in two successive PST cuts (which tend to favour the wealthy over those living in poverty), while promising no ill effects (pun intended) in Healthcare delivery. The NDP, campaigning on Healthcare, haven’t made any progress improving things and, instead, have taken a pile of money out of revenue.

And potentially contributed to increased emissions.

Now Wab Kinew is talking with the Federal government about how to get out of the federal Carbon Pricing plan. He is being very closed mouth on details. Will it still be a carbon tax? Will it be hidden? Will there still be a rebate as incentive?

These are conversations we need to have.

Last summer, Canada was blanketed in forest fire smoke for the entire summer. 2023 was the hottest year on record and we have had a dry winter across the west. It is a situation that has, with great certainty, been exacerbated by climate change.

The Conversation We Must Have

This summer will likely be worse.

Water shortages mean pressure on food production. It means more forest fires along with the costs to fight them and the cost in lost timber. Insurance rates will go up. Pressure on immigration will increase. In Manitoba, low lake water levels means higher Hydro costs. Internationally, instability due to climate change will increase, affecting supply chains.

These are the conversation we should be having as a country.

Climate Change is going to cost us a lot and the bills are coming due.

The “Axe the Tax” campaign is pithy pandering. It is not a real solution to a real problems and we need to demand that our leaders, from Poilieve to Moe to Kinew, take the climate crisis seriously.

(Cross posted to Green Party Lac du Bonnet)

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