Canada Federal Carbon Dioxide CO2 Tax

[JerrySeinfeld]

There is no other feasible solution to limiting Canada's CO2 emissions which are a major source of greenhouse gas emissions.

Huh?

So cripple the engine of the nation's economy to result in no discernable effect on the world's climate?

Ya. Makes PERRRFECT sense to me

[August1991]

gc, that's a good article.

The report uses the term carbon tax and carbon trading permit interchangeably. A carbon tax is generally considered to be a fee imposed on business for every tonne of greenhouse gases emitted into the atmosphere. It is named a carbon tax because carbon dioxide is the most prevalent greenhouse gas.

A carbon trading system sells emission permits to companies at a set cost. Companies can reduce the need to purchase credits by reducing their greenhouse gas emissions, or they can buy credits from other companies if emissions exceed government-set targets.

The Conservative government has promised some form of emission trading system and has indicated the cost of permits will start at $15 per tonne.

The Liberal party has proposed a variation on this called a carbon budget, in which companies that are over a set limit can buy credits starting at $20 per tonne. Companies can get their money back if they invest in technology that reduces emissions.

The Liberal approach is wrong. The money should not go toward subsidizing investment in new technology. Instead, the government should simply cut dollar-for-dollar taxes elsewhere. Carbon tax revenues should be revenue neutral.

This could be similarly accomplished with tradeable permits but then the question of how to allocate the permits becomes problematic.

I also like the Tory idea of starting with $15 per tonne tax initially. Start small, get data and see where this goes.

So cripple the engine of the nation's economy to result in no discernable effect on the world's climate?

It is in the word discernable that your logic is in error.

Even you, Jerry, make a discernable albeit small contribution to GHG emissions.

In a noisy, crowded room, each individual's voice contributes to the cacaphony. Somehow, we have to get 6 billion people to speak less loudly. A tax on speaking loudly is the only way to go.

[JerrySeinfeld]

Even you, Jerry, make a discernable albeit small contribution to GHG emissions.

In a noisy, crowded room, each individual's voice contributes to the cacaphony. Somehow, we have to get 6 billion people to speak less loudly. A tax on speaking loudly is the only way to go.

Why would it be imperitive that the national policy of a nation do the following:

1. Attempt to reverse a trend that is a net benefit for that particular nation.

2. Cripple the nation's economy to reduce world emissions by 0.003%.

It's not good politics and it's not good policy for anyone with a brain in this country.

[August1991]

2. Cripple the nation's economy to reduce world emissions by 0.003%.

Cripple?

From G & M article above:

At $50, a carbon tax would shave about $4.8-billion from Canada's GDP in 2010, which works out to about 0.09 per cent of GDP. However by 2020, the impact would become slightly positive for the economy, working out to a 0.004 per cent increase to the GDP.

As to your comment about Canadians contribution to GHG, any one person's voice in a noisy room has a similarly small but discernable effect.

[Mad_Michael]

The key problem with carbon taxes is that it gives the government a revenue stream they will be loath to do without once they get their grubby hands on the loot.

This creates the 'unintended' effect of creating a government vested interest in having more pollution (and never reducing it).

On this basis, I must conclude that unless a carbon tax is revenue neutral to the government, it is bad idea.

[JerrySeinfeld]

2. Cripple the nation's economy to reduce world emissions by 0.003%.

Cripple?

From G & M article above:

At $50, a carbon tax would shave about $4.8-billion from Canada's GDP in 2010, which works out to about 0.09 per cent of GDP. However by 2020, the impact would become slightly positive for the economy, working out to a 0.004 per cent increase to the GDP.

As to your comment about Canadians contribution to GHG, any one person's voice in a noisy room has a similarly small but discernable effect.

The world's best economists can't tell us what the collapse of today's housing bubble in the US will do, but everyone knows what the effect of a carbon tax will do in 2020? HAHAHAHAHAHAHA

You're right about the voice, though.

If we're all scream in a hockey arena and one person stops - technically the room will be a touch less noisy.

So think of the Air Canada Centre after a Leaf's goal.

The place erupts in a wash of screams. To complete the metaphor, you're suggesting we tell one child to keep his mouth shut.

[gc1765]

The world's best economists can't tell us what the collapse of today's housing bubble in the US will do, but everyone knows what the effect of a carbon tax will do in 2020? HAHAHAHAHAHAHA

No, apparently you are the only one who knows what the effect of a carbon tax will be:

Cripple the nation's economy to reduce world emissions by 0.003%.

Apparently you know more about the effect on the economy than an economist.

[geoffrey]

On this basis, I must conclude that unless a carbon tax is revenue neutral to the government, it is bad idea.

Agreed. But it has to go further than that.

Not to mention there is no such thing as a revenue neutral tax. Good luck ever seeing that. Governments don't ever cut taxes (or more appropriately, reduce revenue). They just find better ways to hide them or distribute them on different people to achieve political ends.

[FascistLibertarian]

Could someone please explain what we would use as a fair baseline to figure out how much carbon Canada is going to produce? Until we answer that question this whole 'carbon tax' question is pointless because it is secondary. I see no reason to use 1991 baseline levels or 2004 baseline levels, they are arbitrarty and our current and future situation is complex.

Although it is still better than carbon trading (which makes 0 sense).

[August1991]

Hoping to "light a match" under federal environment policy, a pair of Canadian economists is pitching the idea of a national carbon tax that would rake in huge new revenues for Ottawa and spit them back out in hefty tax cuts.

The University of Calgary's Jack Mintz and Simon Fraser University's Nancy Olewiler base their idea on the federal government's existing 10¢-a-litre gas tax, which amounts to a tax of $42 per tonne of carbon.

Set a tax at that level on all other fossil fuels, and the government would pull in $12-billion to $15-billion in new revenues, which it could use to cut personal and corporate income tax by fully 10%, they write in "A Simple Approach for Bettering the Environment and the Economy: Restructuring the Federal Fuel Excise Tax," which was released on Wednesday.

FP

This proposal is interesting because it recognizes that the current 10 cent per litre federal excise tax on gasoline amounts to a $42 per tonne CO2 tax. Logically, we should extend this carbon tax to other sources (coal, natural gas, etc.) and then cut other taxes to make the change revenue neutral.

In the future, governments may rely solely on environmental charges, resource royalties and congestion fees for all their revenues. There will be no need for income taxes or sales taxes.

[gc1765]

This proposal is interesting because it recognizes that the current 10 cent per litre federal excise tax on gasoline amounts to a $42 per tonne CO2 tax.

How much of that 10 cents per litre goes towards building new roads and maintaining them? Shouldn't the people who use the roads (i.e. the people buying gas) be paying for them, in addition to any tax on the carbon dioxide/pollution they emit?

[Argus]

Can anyone explain to me the logic of a carbon tax?

The logic is as follows:

The world appears to be getting warmer. We're not entirely sure why. Some people think it might be solar activity, others a fairly normal divergance in the world's temperature which occurs from time to time. But it might be, at least in part, a small part, due to our carbon emissions.

If we spent trillions and trillions and trilllions of dollars, it's possible this might, eventually, have some small influence on the warming of the globe. But we're not entirely sure.

If you aren't willing to do it, though, you clearly are a monster who hates the planet.

[Argus]

Huh?

So cripple the engine of the nation's economy to result in no discernable effect on the world's climate?

Ya. Makes PERRRFECT sense to me

And to add to this - our emissions are NOT a major source of greenhouse gas emissions. Man made carbon emissions constitute, at best, a tiny fraction of a percentage of actual emissions. And Canada's an even smaller fraction of that.

[Dog]

Taxing people into wealth and prosperity is certainly an interesting concept . What would be your model ?

[gc1765]

If we spent trillions and trillions and trilllions of dollars, it's possible this might, eventually, have some small influence on the warming of the globe....

How is shifting taxation from income/business tax to a carbon tax going to cost trillions and trillions??

[GostHacked]

Oh, I don't know, maybe a little something called "drought"?

Like there isn't drought in some parts of America. Doesn't the thought occur to anyone else that it might be worthwhile to build a water desalination plant or two? There are solutions to drought that don't involve praying for rain.

Desalintion won't help for land locked countries effected by drought and desert. If we are really concerned about drought, why are we not halting the devestation of the rain forests in South America. Instead of wasting energy on creating or trying to grow things in a climate and area that will not grow vegitation, why not preserve the forests we already have? This can have just as much as an effect on GW.

Also, with how the International Monetary Fund and the World Bank, most countries cannot afford to buy into this plan to help themselves. if they did the country puts themselves in immediate debt.

Again, just to point out that CO2, is good for plants.

[Wilber]

How much of that 10 cents per litre goes toward building new roads and maintaining them? Shouldn't the people who use the roads (i.e. the people buying gas) be paying for them, in addition to any tax on the carbon dioxide/pollution they emit?

If that 10 cents did go into building new roads and maintaining them you would have a point but historically about 5% or 1/2 cent has been returned to the provinces. In the US it has been law that federal fuel taxes must go into roads but in Canada it has been anything but. When you compare our highways, it shows.

[gc1765]

If that 10 cents did go into building new roads and maintaining them you would have a point but historically about 5% or 1/2 cent has been returned to the provinces. In the US it has been law that federal fuel taxes must go into roads but in Canada it has been anything but. When you compare our highways, it shows.

It doesn't matter how much is transferred to the provinces, it matters how much money is spent building and maintaining roads.

[Wilber]

It doesn't matter how much is transferred to the provinces, it matters how much money is spent building and maintaining roads.

Look at it this way, about a billion dollars a year leaves BC in the form of federal fuel taxes. If they spent a billion a year on the Trans Canada, it would be eight lanes and dead straight through the Rockies plus we would have a bridge to Vancouver Island.

[gc1765]

Look at it this way, about a billion dollars a year leaves BC in the form of federal fuel taxes. If they spent a billion a year on the Trans Canada, it would be eight lanes and dead straight through the Rockies plus we would have a bridge to Vancouver Island.

How many roads are there in B.C.? How much is a single project like twinning the port mann bridge going to cost (hopefully they will put in a toll)? I would be surprised if we spent less than $1 billion per year on roads in B.C.

[Wilber]

How many roads are there in B.C.? How much is a single project like twinning the port mann bridge going to cost (hopefully they will put in a toll)? I would be surprised if we spent less than $1 billion per year on roads in B.C.

Lots of roads in BC but the feds don't pay for them. Yes the federal government is contributing to the twinning of the Port Mann (its over 50 years old you know) but it is also part of the Trans Canada for which they are supposed to be at least partly responsible. There will likely be a toll but it will be paid by the people crossing it who are also paying tax on their fuel, not by the federal government.

[Riverwind]

How is shifting taxation from income/business tax to a carbon tax going to cost trillions and trillions??

There are basically two groups of people/businesses:

1) Those who will end up with more disposable income in the short term because the decrease in taxes offsets the increase in energy costs.

2) Those who end up with less disposable income because the increase in energy costs exceeds any tax offsets.

Most people in group 2) don't have any options to reduce energy consumption. For example, trucks are already extremely efficient and there are zero alternatives to fossil fuels if you want to move goods from one place to another. Even in the case where alternatives are available they are always more expensive than fossil fuels. This means that people in group 2) will end up with less money.

More importantly, many energy intensive businesses provide services which people in group 1) want but these services will cost a lot more due to the carbon tax. In the long term, rising prices means people in group 1) will end up with less money too even though they may think they are 'winners' in the short term.

That is why the term 'revenue neutral carbon tax' is an oxymoron. Artificially increasing the price of energy costs everyone in the long term. Such a cost might be justified if CO2 was known to be a real concern, however, the best the current science can tell is that CO2 *might* be a problem.

Edited April 11, 2008 by Riverwind

[gc1765]

Lots of roads in BC but the feds don't pay for them. Yes the federal government is contributing to the twinning of the Port Mann (its over 50 years old you know) but it is also part of the Trans Canada for which they are supposed to be at least partly responsible. There will likely be a toll but it will be paid by the people crossing it who are also paying tax on their fuel, not by the federal government.

It doesn't matter whether it's the feds or the province that pays for it, it matters how much it costs, since we all pay in the end. If the province is paying for it, that means I'm paying to build roads through provincial taxes while the gas tax goes to the feds. Question is whether I am paying more provincial/municipal tax to build roads than what is transferred to the feds.

[gc1765]

More importantly, many energy intensive businesses provide services which people in group 1) want but these services will cost a lot more due to the carbon tax. In the long term, rising prices means people in group 1) will end up with less money too even though they may think they are 'winners' in the short term.

If you are trying to say that the increased cost of goods and services will be passed on to the consumers in group 1, then you can't say that people in group 2 will have less money as well.

I agree that the increased costs will be passed onto the consumers, however any increase in price is equally offset by a reduction in taxes (on average). Those who consume more products that require more energy to produce will pay more, but those who consume less will be better off. It's a zero-sum game.

Such a cost might be justified if CO2 was known to be a real concern, however, the best the current science can tell is that CO2 *might* be a problem.

I disagree, though I'd rather not debate that right now. But keep in mind that CO2 is not the only product of combustion. Think of all the carcinogens that are being put into the air. Even if you don't think CO2 is a problem, I don't think anyone could argue that all of the other carcinogens are not a problem.

[Drea]

Lots of roads in BC but the feds don't pay for them. Yes the federal government is contributing to the twinning of the Port Mann (its over 50 years old you know) but it is also part of the Trans Canada for which they are supposed to be at least partly responsible. There will likely be a toll but it will be paid by the people crossing it who are also paying tax on their fuel, not by the federal government.

Yes, we are going to end up with a toll to get to work. Great.

Yet no toll on the new highway to Whistler... a highway only used by the wealthy -- those who can afford to go to Whistler, who can afford to attend Olympic events.