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Carbon taxes for dummies: ‘A carbon tax makes all of us pay’


Given the amount of misinformation being generated by politicians, pollsters, pundits, think tanks and others about carbon taxes, let’s discuss what’s true and what isn’t.

1: A carbon tax raises taxes. True.

You would think this would be obvious but apparently not. A carbon tax is a new tax charged by governments that for the first time attaches a cost to the release of industrial greenhouse gas emissions linked to man-made climate change into the atmosphere. It’s not a money tree dispensing government largesse to all Canadians.

2: A carbon tax makes “big polluters” pay. False.

A carbon tax makes all of us pay, because we buy the goods and services that “big polluters” create through the use of fossil fuel energy, meaning oil, coal and natural gas. These “big polluters” then pass along their increased costs to us as higher taxes and/or prices, typically with additional financial help from the government, meaning us, so they don’t bolt to jurisdictions which don’t have a national carbon tax, like the United States.

3: All carbon taxes are alike. False.

Cap-and-trade, a carbon tax by another name, is the worst from of a carbon tax because of its lack of financial transparency. The best is carbon fee and dividend, a revenue neutral carbon tax recently proposed by Canadians for Clean Prosperity, headed by former Stephen Harper policy director Mark Cameron. A revenue neutral carbon tax returns the money raised to Canadian households in the form of equal dividend cheques (Cameron’s preference) or income tax cuts.

4: Carbon fee and dividend means, as Canadians for Clean Prosperity claims, that “the vast majority of households, regardless of income level, would receive more money in the form of carbon dividend cheques than they would pay in carbon taxes.” False, in the sense of being unrealistic.

Revenue neutral carbon fee and dividend — assuming Prime Minister Justin Trudeau doesn’t snatch the money back from us directly or indirectly (a big assumption) — would leave about two-thirds of households financially better off and one-third worse off, because lower income families buy fewer energy-consuming goods and services than higher income ones.

5: Trudeau’s carbon tax will enable Canada to meet its international commitments to reduce emissions. False.

Despite insistence by Trudeau and Co. that it will, the federal environmental and sustainable development commissioner, all provincial auditors general save for Quebec’s, the United Nations and the federal government itself, have all said current initiatives, including those planned but not started, are insufficient to meet Canada’s targets, which used to be Harper’s targets, back when the Liberals were in opposition and condemned them as inadequate.

There are two types of political dishonesty when it comes to debating carbon taxes.

The first comes from Trudeau and Co., who claim the carbon taxes they’re implementing will result in Canada achieving its emission targets. At best, they are a small, first step. Carbon taxes will have to increase quickly and dramatically to have any hope of achieving Canada’s commitments.

The other comes from Andrew Scheer and the Conservatives, who say they believe in man-made climate change and we must act, but who simply attack Trudeau’s plan, without proposing any alternative, other than Scheer promising to outline a carbon reduction strategy that will meet Canada’s commitments, but not include a carbon tax, before the 2019 election.

That’s as pie-in-the-sky as believing a carbon tax makes everyone richer.