Trickle-Up Carbon Taxes

Here are some points about carbon taxes which may have passed under the radar gleaned from Canada’s Ecofiscal Commision (a Canadian think-tank.)

The commission had what they refered to as a debate today between Chris Ragan, chair of Canada‚Äôs Ecofiscal Commission and Merran Smith, Executive Director or Clean Energy Canada moderated by the Globe and Mail’s Editorial Page Editor Tony Keller. It wasn’t much of a debate, it was more like publicity. The live event was aimed at corporate oil sector executives.

The participants mostly echoed each others’ comments. Even pre-recorded clips and guest questions simply regurgitated the day’s talking points. They were few, but seemed to encourage oil companies to accept the incentivization programs aimed directly at them. The public, and its concerns, were for the most part, ignored.

The one point which kept coming up was that carbon taxes should be revenue-neutral. What this means is that while companies would be taxed for their share of carbon emissions (again, there was no distinction between CO, CO2, and CH4) at about $30/tonne, the money would then come back to the company through special programs, tax breaks in other areas, or subsidies. BC’s cement industry was cited saying that some $25M had already been given in order to reduce GHG emissions. So is the government trying to get some of its money back, or is it trying to get corporations to pay for their own subsidies?

BC uses a revenue-neutral system whereas the system in Quebec is cap and trade (Quebec carbon is taxed at about $14/tonne.) The problem here is the perception of oil companies; if they feel the taxes are not revenue-neutral, the ‘debators’ conceded, there would be an exodus of mostly manufacturing jobs towards cheaper emerging markets. In other words, ‘the working man’ suffers.

They then pointed out that manufacturing jobs were being replaced with other jobs (in Ontario total hires went up.) If those jobs are being replaced with better jobs (R&D,) (re)education will cost more for the workers and saddle them with more debt – if Canadians are even qualified to do these jobs – which is doubtful. But if the jobs (as is more probably the case) are being replaced with lesser jobs (service sector) as is the current trend, again it is ‘the working man’ who suffers.

Emerging market countries have been quick to point out that most of this ‘pollution’ was made by developed market countries who then counter that the pollution from the next fifty years will be mostly EM, and much worse. We got it on credit, but you have to pay up front.

Finally, the ‘leftover’ taxes would be used to help subsidize public transport. Since less people will be able to afford cars, this seems reasonable. Again it is ‘the working man’ who suffers. Those who can afford it will be encouraged to buy newer cleaner cars. More money being spent by the public which already owes a tremendous amount of new car debt in favour of the car companies who produce the pollution in the first place. This is all getting rather circular. Who suffers? You guessed it.

All this is based upon the notion that this entire carbon market will not be a free market, but a highly manipulated one; one in which the price of carbon can never be high enough, much like the already carbon-tax-laden airline ticket. Prices will be set, because if the market were left to its own devices, and it turns out that CO2 does nothing to raise global temperatures, the >$1T market would collapse taking everything out with it.

Canada’s Ecofiscal Commision has no literature referencing sources for CO2 harm, cites no peer-reviewed papers backing up its claims, will not provide any references, and says the science is settled which negates the need for any pesky proof.

The commission has also indicated that all forms of carbon emissions should be subject to taxation. Get ready for a breathing tax, Canada.