Ottawa’s Carbon Tax Does Not Do Much For The Planet

There is a long list of individuals and organizations that will not be paying the federal carbon tax. Many of those that do will receive payments that more than offset their cost. Is this a mighty blow in the fight against climate change?

The Liberals announced a tax on carbon last year, with the proviso that a province would be exempt if it created its own plan in a manner that satisfied the federal government.

At first it looked like almost all provinces would do so, but recent defections mean that almost half of all Canadians will be subject to the federal tax regime. The design of that regime has been heavily influenced by political and economic considerations.

Farmers and fishermen will not pay the tax on fuel used in their work. How that can be separated from other uses is a bit of a mystery.

Relief will also be given to residents of rural and small communities, users of aviation fuels in the territories, greenhouse operators, power plants that generate electricity for remote communities, and Indigenous Peoples.

Companies that are trade-exposed to competitors in countries without a carbon tax will only pay the tax on emissions above a level determined by bureaucrats to protect the competitive position of responsible operators.

For families there will be “Climate Action Incentive Payments” based on family size. These are projected to pay the on average more than what they paid in taxes. In 2019 the excess varies from 23% in Ontario to 48% in Saskatchewan. Its enough to make the exempt people jealous.

That extra must come from somewhere. Those paying for the generous incentive payments will be small and medium sized businesses, larger businesses that are not “trade-exposed”, municipalities, schools, hospitals, non-profits, universities, and Indigenous communities.

All but the largest businesses will be eligible for programs, yet to be designed, “to help these groups take climate action” (no word on whether faith communities will have to swear allegiance to Trudeau’s values statement to be eligible).

The funds available for those programs are much less than the taxes the eligible groups will pay.

The carbon taxes they pay will show up in the prices that consumers pay when shopping at the mall, getting their car towed or repaired, eating at a restaurant, curling or skiing, using taxis, buses or subways, or travelling by plane.

It will show up in increased costs for universities which will translate into higher tuitions or more cost to taxpayers, or both.

Health and education represent 60% of provincial spending. A significant chunk of that is heating costs for schools and hospitals, and fuel for ambulances and school buses. The carbon tax on that will have to be paid for by provincial taxpayers, as will higher costs for snow plows and other roads equipment.

Conveniently for the federal government, the tax increases needed to pay for these increased costs will be blamed on the provincial or municipal governments.

What does this achieve? In the four affected provinces, the emissions base on which the projected fuel charges are calculated goes down by just over 3% by 2023-2024. Presumably emissions from the many parts of the economy not impacted by the taxes will continue to grow.

Canada’s commitment under the Paris Climate Agreement is to reduce carbon emissions to 30% below 2005 levels by 2030. Progress to date has been slight and the latest initiative will barely move the needle. The Liberals put protecting Canada’s economy ahead of protecting the planet.

Federal Environment Minister Catherine McKenna still asserts that the goal will be reached, based on further policy initiatives. Those initiatives would need to be far more effective that what was announced this week. If they are that good, why have they not been implemented already?

The Liberals like to describe those opposed to their carbon tax as unwilling to deal with climate change, as if taxing carbon is the only way to meet the Paris agreement. Their version of a carbon tax does not measure up.

Meanwhile Nova Scotia, among the highest users of coal for electricity generation in 2005, has been rapidly moving toward more renewables. It has already made excellent progress. It expects to reduce overall greenhouse gas emissions by 45 to 50 per cent from 2005 levels by 2030.

As a result, it has been allowed to use its own program, which reportedly will cause trivial increases in fuel and electricity prices. Nova Scotia’s results are good for the planet, but would have happened with or without the federal carbon tax program.

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