Memo To Houston: If Ottawa Gives You Lemons Make Lemonade
Posted July 7, 2023
Premier Houston has been a persistent and vocal critic of the federal carbon tax. Now that the Trudeau government owns the blame, Houston should plan to own the proceeds.
On July 1st a litre of gas in Nova Scotia went up 17 cents and diesel went up 20 cents. Home heating and propane had comparable increases. The carbon tax will ratchet up every year until 2030.
Environment and Climate Change Minister Steven Guilbeault repeats the lie that most people will receive more money through quarterly rebates than they pay out as a result of the levy.
This is false in three ways.
First, the Parliamentary Budget Office’s calculations show that about 60% of Nova Scotians will get less in rebates than they have been taxed at the pump.
Secondly, the Budget Office projects that the tax will negatively affect the economy, meaning that there will be a loss of employment and investment income. As a result all but the lowest 20% of earners will be losers. The average net cost in 2030-31 for all households will be $1,513.
Thirdly, as pointed out in this space in December, the carbon tax will add to your provincial and municipal taxes. That is because it will apply to buildings and vehicles owned by municipalities or the province. There are no rebate cheques for those, so the carbon fee must be passed on to municipal and provincial taxpayers.
The bad news does not end there. Most of the items in your shopping basket arrive from outside the province. The warehouses and delivery vehicles necessary to distribute goods have to pay the carbon charge, adding to the cost of those items. The same is true for furniture, appliances, electronics, tools and equipment. Universities will need to raise tuitions to pay for their carbon taxes.
More broadly, the carbon tax will add inflationary pressures. The Bank of Canada is trying to reduce inflation to the target range of 1% to 3%. Recent progress will be undone by the carbon tax’s addition to inflationary pressures. Further interest rate increases will be required, making housing more expensive.
Inflation that exceeds the Bank of Canada target range makes collective bargaining difficult because there is considerable uncertainty about the future. Unions want to protect their members from falling behind while employers want to control costs. The Nova Scotia nurses have been without a contract since November 2020 and are finding it difficult to reach a new agreement.
The persistent lying by Minister Guilbeault reflects an out of touch federal government. His department has legislated a clean fuel requirement that will require expensive retooling by refineries. This will add further to the cost of gasoline, about which he dismissively says that the refineries should pay for it out of profits.
Meanwhile, Ottawa proposed to charge media such as Google and Facebook for linking stories from news media, to which the tech giants said they would stop doing so, while not blocking SOS safety alerts or information about forest fires or floods, or other crisis situations.
Heritage Minister Pablo Rodriguez nevertheless insisted that one of the “consequences” of withdrawing from news “is they’re putting people’s lives in danger.” It does not seem to occur to him that his legislation is the problem.
In 2020 Natural Resources Minister Seamus O’Regan explained that the Atlantic Loop is meant to replace the Maritimes’ coal supply with hydroelectricity from Labrador and Quebec, an idea that requires a significant infrastructure investment: “We would build transmission lines to tie the Labrador-Quebec grid into New Brunswick, and then into Nova Scotia.”
Twenty-two months later, “we” have made no visible progress: no agreed channel of transmission, no agreed source of power, and no contribution toward the capital cost of either from Ottawa, which has limited its offer so far to fully repayable low-interest loans.
There is not much that Houston can do to move Ottawa on the Loop, but there is an opportunity with the carbon tax. Minister Guilbeault has from the outset pressured Nova Scotia to implement its own carbon tax, thereby avoiding the federal tax.
Houston should take him up on the offer. He should now implement the tax provincially, obliging Ottawa to exclude Nova Scotia from its tax. The taxes on provincial vehicles and buildings will go back to the provincial treasury instead of flowing to Ottawa.
Taxes on municipal vehicles and buildings can be used to support green initiatives. The announcement on Thursday that oil furnaces will be replaced by heat pumps in Cape Breton Community Housing Association homes is an excellent example.
There will still be taxes on commercial buildings and vehicles in addition to those on personal cars and homes. That will be more than enough to provide a rebate program identical to the federal one. Don’t pretend that it is a win for most Nova Scotian households.
Perhaps there would be enough left over to provide some income tax relief to low-income earners.