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The first time I heard the phrase “carbon tax,” I admit that I was confused. I had a sense this was a policy to help protect the environment, but I couldn’t have told you anything beyond that.
I thought of myself as someone who cared about environmental issues, but I was also busy running a small business and trying to figure out how to be a father to a new baby. I wasn’t thinking about climate change, let alone climate policy.
A few years later, my thinking started to change. I began seeing the impact that extreme weather was having on the farmers who supplied my company, and it made me think about the world my son would inherit.
I began reading about climate change, and it was like a punch in the gut. I had no idea we were putting ourselves in so much jeopardy by warming the planet.
My first instinct was to change my own behaviour. But it didn’t take long to see that turning down the heat in my house wasn’t going to solve the problem, while change on a bigger scale would require government policy.
In my search for solutions, I kept reading about carbon pricing. The vast majority of experts — climate scientists, economists, concerned citizens — all agreed it was the lowest-cost way to tackle climate change. Their arguments made sense to me.
As the owner of a small food delivery business, carbon pricing appealed to me because it’s a market-based solution to climate change. It gives people and businesses the freedom to choose how to reduce their emissions — it doesn’t impose solutions on them with regulations. Carbon pricing offers a solution to the climate problem that allows people to transform the economy themselves, rather than re-engineering it from above.
Today, I’ve switched to working full time as an advocate for smart climate policies.
When the federal government recently announced it was increasing the “price on pollution” — the carbon tax — I assumed many Canadians were still mostly in the dark about how it works, as I was just a few years ago. So, here’s what I think they should know.
First, carbon pricing is affordable. I know it doesn’t sound that way — how can tax increases be affordable during trying economic times? But the carbon tax is the only climate policy that sends money back to all Canadians to compensate them for the extra costs they face.
Yes, gas prices and home heating bills will go up. That will understandably be a concern for many people, especially in this downturn. But the majority of Canadians, especially lower-income households, will receive more money in rebates than they pay in carbon taxes.
By 2030, a typical family of four in Ontario will receive over $2,000 per year in quarterly carbon rebates. That money will offset higher fuel costs or help people invest in reducing their carbon footprints.
The bottom line is this: If you reduce your carbon output, you’ll pocket more of your rebate and come out further ahead. If, over the next 10 years, you can’t switch to an electric car or make your home more energy efficient — or if you don’t want to — then nothing will change. The rebate will cover the costs of the tax.
When Canadians learn about the carbon rebates, they overwhelmingly support the policy. For example, a poll my organization released in September found that two-thirds of people in Ontario’s 905 region support carbon pricing when they understand how it works.
The second thing you should know about carbon pricing is that the alternatives are more expensive, and they don’t include a rebate. Once you accept that doing nothing about climate change isn’t an option, you’re only left with two alternatives to carbon pricing: regulation and spending.
Regulating our way to a solution would be cumbersome and costly. Relying on spending to reduce emissions would add billions of dollars to an already ballooning debt. The Ecofiscal Commission, an independent group of Canadian economists assembled to study the issue, found that even the best alternatives to carbon pricing would cut $1,200 from Canada’s annual per capita GDP by 2030.
The third thing to know is that carbon pricing is the best way to support the technologies we need to solve the climate change problem.
For example, we already have the ability to capture carbon dioxide from the smokestacks of industrial facilities, like steel mills and power plants. But it’s expensive. A rising carbon price gives businesses the incentive to make that investment. Why pay carbon tax when it’s cheaper to capture your carbon pollution?
Reducing their emissions also helps businesses compete in a global marketplace that is increasingly demanding lower-carbon products. That’s one of the reasons that business groups like the Canadian Chamber of Commerce and the Mining Association of Canada, as well as many oil and gas companies, are in favour of carbon pricing.
It makes me sad that taxing carbon has become a partisan issue in Canada. Carbon pricing was invented by conservative economists, but it isn’t exclusive to any one political party. You don’t need to support Prime Minister Justin Trudeau to support a carbon tax. Instead, you can tell your party of choice to come up with an even better version of the policy.
For example, my organization is advocating more support for rural residents and small businesses to help them manage the effects of the tax. Some conservatives have called for converting the carbon rebates into income tax cuts.
Nobody likes paying more taxes, even if they’re rebated back to you. But Canadians expect their leaders to address climate change. And the facts are clear — there’s no better way to address climate change than through carbon pricing.
Michael Bernstein is the executive director of Clean Prosperity.
Comments
To Michael Bernstein
@bernstein_micha
Your support of the Carbon tax is good, but prompts these comments.
“carbon pricing is affordable” As much as with any tax, it is not a matter of being affordable. It is a question of what mix of tax is the least undesirable. There is justification for debating that the only tax should be a carbon tax. That debate being part of the debate that tax should be levied for social reasons rather than for the financing Government expenditures.
“sends money back to all Canadians” For a Government that levies an income tax on incomes of less than the poverty line, that policy is just another political scam. For fairness and efficiency the offset to help less well off Canadians is a simple increase in the exempt from tax bracket and a so called “negative income tax” or “basic income”. There is also a need to debate eliminating tax on earned income. The tax charged on wages is also a part of the gross wage cost added to all forms of production in Canada. That, by the way is also the reason that all imports should bear a tax of the same rate as Canadian production.
“add billions of dollars to an already ballooning debt” The ballooning debt is the result of the change in policy in 1974 that stopped the Government from financing their payments from Bank of Canada reserves and instead issuing bonds in the private financial markets. The trillion dollars of debt charges expense since that date was nothing but a transfer of taxpayer money to the financial interests. Look at any graft of Canadian Government debt and see the flat line until 1974 and the forty degree angle of debt growth since.
Economists and many observers are realizing that the western world (USA dominated) “neo-liberal policies” of the last half century have been a great failure. If only our media had stayed independent.
Edd Twohig, Kentville, NS 902 691 2866
"all imports should bear a tax of the same rate as Canadian production." This would eliminate the competitive advantage of cheap labour countries, which is the driving force behind globalization. Exporting production to low cost countries like Mexico, China, India and South East Asia has improved the standard of living of millions of people at a cost of lowering the living standards of thousands of North Americans.
Is this a reasonable balance?
Unfortunately, despite what was stated in the article, a carbon tax is not the effective or most efficient way to lower emissions. It is not a solution that will work within the time frames that we need to meet. While it might be part of the solution, a sweetener that indicates direction, the heavy lifting will be done by regulation, firm emission controls, targeted support for needed technologies, investment and programs that reduce emissions. The reason “most”, in the authors words, support a carbon tax is because it is the least threatening to the business community, which dominates our public discussion, but that also makes it among the least effective ways to reduce emissions. It also has the political downside of increasing carbon inequality. Even with rebates, those at the lower end of the income scale will not be able to purchase the technologies needed to reduce emissions, they will still be paying the tax long after those better off have purchased the low GHG technologies, reduced their carbon tax payments while still receiving their carbon rebate. Regulations can leave plenty of room for individual variation to meet reduction targets, and not divide the community over a relatively ineffective regressive tax.
Agreed. The problem broadly is that markets aren't actually magic. More specifically, the problem is that, as the writer of the article himself acknowledges near the beginning of the article, individual action (a la turning down your heating) is not sufficient; what's needed is systemic change. Individuals aren't in control of everything. Renters aren't in control of how their homes or water are heated, for instance, and landlords will just pass the carbon tax cost along in the rent. Public transit is obviously not created by individuals. And so on and so forth. Carbon taxes change behaviour mainly at the consumer level. In economic-y terms, studies have shown that demand for fossil fuels is quite inelastic, so raising the price with a tax is not all that effective.
Don't get me wrong, I support the carbon tax, and it does make some difference; demand for fossil fuels is not completely inelastic. But you cannot then just rub your hands together vigorously and say "done!"
Thank you for the article.
My main goal is reducing carbon by encouraging people to switch to better technology.
The goal is 0 carbon by 2050 and at least 30% by 2030. This means it is a gradual phase down.
If people can't afford to change technologies than not much happens.
I am always impacted by the the fact that average family gross income in Canada is approximately $55000.
As a person, living in Ontario, who went out to buy an EV it was clear that at over $50000, when you add in taxes, delivery, etc ... I could not afford it and I am over $55000. I was able to get the new Toyota Corolla Hybrid which reduced my gas consumption over 40%, and at times much more. I am averaging over 65 mpg or 4.1 l per 100 km, which brings me under the 2030 goal. and I will be 0 carbon before 2050. To some groups I would be frowned on. I have been fighting for tax credit for regular hybrids since that is what most people can afford.
My point is that without the subsidies provided by Quebec and the former Wynn government the cost of EVs is too high for most Canadians. In spite of losing the credits I believe the money from the carbon tax, if it continues, should all go to credits for new technology as was done previously in Ontario and continues in Quebec. People forget not all Canadians get the carbon tax credit .. only to provinces that opted out.
Under Wynn I would have got a $14000 credit or higher, instead of $5000 and I would have had a chance. Right now it is simply a money swapping event where I give the money at the pump and get it back later.
In general I don't believe there should be a carbon tax where it is not possible for most people to change their technology. The greatest example of this is residential natural gas home heating, especially in Ontario. In Ontario the only real alternative to natural gas furnaces and water heaters is electric. In my home I pay an average of $60 per month for my natural gas furnace and water heating. a switch to electric would raise that cost to well over $300 per month, due the mistakes of Premier McGuinty. Very few can afford this and even if they can that means there is $240 or so of money drained form other parts of the economy.
In addition this doesn't even look at the $6000 cost or more to switch the furnace.
I believe carbon tax was done because it was easy. My positions are much tougher and include:
mandating EV vehicles only by 2040 or earlier, assuming large subsidies and government regulation of prices to prevent gouging, all new homes should have solar panels or wind turbines be required, an increase in the use of hydro power, including greater use of micro hydro stations, and a massive effort to increase the use of hydrogen, which is much better solution than lithium batteries, etc ...
In addition more effort needs to go into carbon capture techniques.
The carbon tax is a false feeling of doing something where ideas like I suggested are real. The only area where I think carbon tax may have impact is in industry, though I believe the government needs to hire a large group of scientists and engineers to help industry find better solutions and then help them.
It is a complicated topic and a few paragraphs do little justice, but in any event to those who read this ... Thank you