Are Carbon Taxes a Tax or Cash Grab? It depends on how it’s implemented. Some politicians don’t even consider it a tax.
But, my first question is Who’s Paying? According to Trudeau: “major carbon polluters in this country face no consequences”, and “we should make the companies that are polluting responsible for their pollution — by paying.” (d) However, if the people are paying the carbon tax then the regular people are paying, not the companies.
You could say that the people are the polluters (although that’s not what Trudeau et al is saying) and the purpose is to get the people to transition to clean energy. But, even if all the people of Canada did transition off fossil fuel, the companies would still be polluting because they would still be extracting oil and gas, refining, etc. and sending it out of country.
A carbon tax “is a fee based on the amount of carbon in a fossil fuel. Fossil fuels such as oil, gas and coal contain carbon. When burned they release the potent green house gas, carbon dioxide (CO2), into the atmosphere. The fee is based on the tonnes of carbon dioxide the fuel would generate, and it would be collected at the earliest point of entry into the economy — well, mine or port.” (a) The fee will increase every year. The tax is then passed on in the price of the products purchased such as gas. Note that the “fee is based on the amount of carbon in a fossil fuel ” (a) and, to my knowledge, does not take into consideration toxic tailing ponds, polluted soil and water, abandoned wells, etc.
Purpose: “With Carbon Fee and Dividend legislation, it is clear to citizens that prices for fossil fuels will go up every year. Part of their motivation is to save as much of their dividend check as possible rather than spending it on more expensive fossil fuels. They can do this by changing over to energy efficient lighting and appliances, upgrading their insulation or windows, replacing that old oil furnace with a geothermal heat pump, etc. When it comes time to get another vehicle, they would consider one that gets better gas mileage or an all-electric vehicle. They can then buy clean electricity (where available) through their utility to charge their car, getting them off fossil fuels altogether. The motivation is to reduce cost in the years to come. The same is true for investors and for fossil fuel companies: as the fee increases, and the cost of doing business rises with it, the rising dividend will ensure that the true cost of doing business will be paid by those in that business. It will extend the lifetime of a valuable non-renewable resource in Canada: petroleum, which is a critical component of many industrial processes and every items.” (a)
If all the tax collected goes back to the people in the form of a dividend then the carbon tax is not a tax or cash grab. It is revenue-neutral. And, as commenter Paul Lailey noted, that includes the GST.
HOWEVER: I expect the politicians will pervert this as they do everything else. For example, they may use the carbon tax to increase transit, ‘green’ public buildings, etc. That is not to say that these things should not be done but it should come out of general revenue. Otherwise, the carbon tax is a cash grab, a new sales tax and it is not revenue neutral. Nor should the carbon tax be used to help businesses transition to renewable energy or to buy more energy efficient fridges (see future post How the Rich Get Richer, Loblaws/Westons), or for the ‘greening’ of the tarsands (what an oxymoron). Again, this is not to say that loans/grants shouldn’t be given to companies who ‘need’ the money, such as renewable energy start-ups, but it should come out of general revenue.
Some provinces are already using the carbon tax as a tax/cash grab, including at least one (BC) that had promised it would be revenue neutral. (c)
Since the politicians cannot be trusted to use the carbon tax as they promise, and if they want to convince me that the plan is not a scam, I need to see:
– the government create a section, either on the the federal website (www.canada.ca) or a link from there to a separate website to provide details on the carbon tax
– the money collected in a separate fund, and, in law, cannot be used for anything but refunding directly to the regular people, by dividend, every penny the regular people paid in and the money cannot be put into general funds at some point in the future
– a detailed plan outlining how much emissions, specific to carbon taxes, are expected to be reduced in each year, and by each sector (for example, household emissions, personal car emissions, tarsands emissions, etc.).
– an update each year showing how much of the emissions reduction target was achieved
– how much solar, wind and battery prices, etc. are expected to come down without carbon tax vs with the carbon tax. I want to be convinced that the carbon tax isn’t a delaying tactic where the politicians just increase the carbon tax each year, while reducing the cost of oil/gas (see next post for more on this) until the market does what it was going to do without carbon tax which is reduce the cost of renewable energy below fossil fuel. The politicians, of course, will take credit for, in essence, doing nothing.
– A list of exactly how much money was collected from the carbon tax and its specific source such as oil/gas companies and other carbon intensive companies, other businesses and the people (gas, home heating, etc.)
– how much was paid to the people in dividends – how did the government calculate dividends for single people, families of four or six, etc.
– If money is given to businesses, from a carbon tax payment that could not be passed on to citizens, there should be a specific description and appropriate reason on how it will be spent (available for viewing by citizens of Canada). There should be a follow-up to ensure the money was spent appropriately. Some businesses should be expected to bare the cost of reducing emissions as a cost of doing business. For example, if a business retrofits to reduce energy emissions and energy costs, they should not receive citizens dollars and pocket savings in energy costs.
– how much money was returned to companies, why and which companies
– how much carbon tax is being charged on the carbon intensive companies, who are being exempted and why
– details on what the provinces are doing
The federal government has talked about doing some of these things such as preparing a detailed plan but I not aware of it being anything more than words. If you read the auditor general’s report you will find that the federal and provincial governments have a mishmash of targets, baseline years, etc. “As a result, it was unclear how the federal, provincial, and territorial governments would measure, monitor, and report on their individual contributions to meeting Canada’s national 2030 target. Many governments did not have detailed implementation plans to reduce greenhouse gas emissions. For the most part, auditors found that governments’ plans to reduce greenhouse gas emissions consisted of high-level goals, with little guidance on how to implement actions. Details often missing from the plans included timelines, estimates of the reductions expected from individual action items, and information about funding.” (b)
An audit in lieu of the website would not be acceptable as the government sets the terms of the audit and the government is too ‘cosy’ with the auditors (see future post How the Rich Get Richer, Part ?).
This website would also allow us to ensure that the carbon tax does not get incorporated into general revenue. Once the carbon tax has fulfilled its role of transitioning people to a low carbon economy, or the market does it despite the politicians, then the carbon tax should be eliminated. Although, I am sure it will be hard to pry the money from the parasitic hands of the politicians (whatever brand).
I want the carbon tax to work. Hell, I’m onboard for pretty much anything that will work to reduce carbon emissions and give us a low-carbon world. But does it make sense to have a carbon tax while you are subsidizing the oil & gas industry? Why not just eliminate the oil/gas subsidies and their costs will go up. So, the politicians will have to prove to me that this is not just another scam.
Will the politicians set up a website, with the details of the carbon tax? I don’t think so. We have a right to this information but they don’t like transparency. It interferes with their corruption.
(a) Carbon Fee and Dividend – Citizens’ Climate Lobby Canada
(b) Perspectives on Climate Change Action in Canada – A Collaborative Report from Auditors General – March 2018
(c) Justin Trudeau’s carbon tax is revenue neutral..for now. – Neil Macdonald, 24 April 2019, CBC News
(d) Trudeau defends price on pollution in anti-carbon tax – John Paul Tasker, 13 Sept 2018, CBC News