For the past few weeks, Liberal leader Stéphane Dion has been trying to knit together support for his “green” carbon tax plan. Sadly for him the closer Canadians look, the more it comes unraveled.
In an article in the Montreal Gazette today, Peter Hadekel asks the $15.5 billion question: Is Stéphane Dion’s “Green Plan a policy for the environment, or tax reform?”
Mr. Hadekel’s conclusion after analyzing the Green Shift is that “the biggest question hanging over the Green Shift” is that “the plan looks a lot more like a piece of tax reform than an environmental policy guaranteed to cut carbon emissions and combat greenhouse gases.“
He points to the “revenue neutral” aspect of the plan and reminds us that, while it may be revenue neutral to the government, IT WILL NOT BE REVENUE NEUTRAL TO INDIVIDUAL CANADIANS AND BUSINESSES. Everyone will pay more, but only certain groups and sectors will get some money back.
His most salient point however is that while Dion’s tax plan is shifty, IT IS NOT GREEN!
“But the most curious part of it, from an environmental perspective, is that it would exempt gasoline. The Liberals argue that current taxes on gasoline already amount to a carbon charge of about $42 a tonne.
Given that automobiles account for a large part of greenhouse gas emissions, it’s hard to see how this policy will have any material effect on a major source of consumption and pollution.
“If you really want to move the yardstick forward from today on the environment, you have to tax gasoline,” said economist Dale Orr of Global Insight in Toronto.
The Liberals claim the tax on gasoline is already high enough, but “I don’t think that’s a convincing argument at all,” Orr said. “I think they’re not taxing gas because they don’t want to take the political heat for it.“
The broader issue is whether any of the Liberal measures will actually succeed in cutting greenhouse gas emissions by the Liberal target: a 20-per-cent reduction in emissions below 1990 levels by 2020.
There’s almost nothing in the policy other than blind faith that higher prices will do the trick.“
Indeed it is oddly curious that the carbon tax does not tax gasoline when it is purported to be a “green” plan to reduce emissions. The Green Shift does tax aviation fuel. The Green Shift does tax diesel fuel (which puts the food on our tables from fishing and farming to grocery store deliveries). To see whether this is prudent policy, we need only look at Canada’s most recent GHG emissions inventory.
Under the Transportation heading we find that Aviation contributed only 8.4mt of CO2 in 2006. Because of the volume of vehicles on the road, Diesel emissions were significantly higher, totaling 42mt of CO2.
In contrast however, gasoline powered vehicles poured over 90mt of CO2 into Canada’s atmosphere in 2006! That is almost twice the combined volume of Aviation AND Diesel carbon emissions!
If you are really interested in cutting carbon emissions, why would you exempt 2/3 of the transportation sector you want to tax? It could only be because you “don’t want to take the political heat” for taxing gas at the pump!
It is interesting to note that 96% of all Diesel emissions come from vehicles involved in the food chain (from farm tractors and fishing boats, to railway and transport truck delivery). Perhaps Peter Nelson, Executive Director of the Atlantic Provinces Trucking Association, wasn’t kidding when he said this carbon tax will result in an $8 head of lettuce.
The economic theory behind Stéphane Dion’s tax plan is as follows: If you add enough taxes to the price of fuel, the high cost will force consumption down and thereby reduce carbon emissions.
There is only one problem with that theory: Gas prices skyrocketed almost 250% while the Liberals were in power (over 150% just in the time Dion was Environment Minister!). During that same time, Greenhouse Gas Emissions also skyrocketed to 35% above the Kyoto targets the Liberals signed on for!
Moral of the story: An increase of 250% in gas prices allowed emissions to rise by 28% (when they were supposed to be going down by 7%). Just how high is Stéphane Dion proposing to raise the price of heat, groceries and gas so that it will force reduced consumption.
Just like the European model that M. Dion likes to showcase, carbon taxes are an environmental and economic failure.