Albertans to receive the highest carbon gift

The carbon gift is not a lump of coal. Albertans will receive the highest carbon tax rebate of any of the four provinces who have opted out of the federal plan. A family of four will receive an average tax credit of $888, compared to families in the other holdout provinces of Ontario, Manitoba and Saskatchewan who can claim a credit of $448, $486 and $809, respectively.

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Let’s call it a gift, not a rebate because most Albertans will receive more back than they pay in the so-called carbon tax. According to calculations by economists Jennifer Winter and Trevor Tombe at the University of Calgary, 80 per cent of Alberta households will get more back from the credit than they will pay in increased costs (Globe and Mail, Dec. 19, 2019).

And can we really call it a carbon tax when it isn’t really isn’t? Taxes are collected by governments to pay for health care, roads, education and so on. The goal of the carbon transfer is to reduce fossil fuel consumption, not to collect taxes. Let’s call it a carbon transfer. Money is just collected and redistributed.

The names given to the carbon transfer and carbon gift are politically motivated.  Conservatives prefer to call it a tax because it suits their political agenda of characterizing the fed’s actions to reduce fossil fuel consumption as a tax grab. The feds like calling the carbon gift “climate action incentive payments” because they like to pretend that we will meet carbon reduction targets.

And the federal Liberals are not rewarding Albertans for shutting them out of the province in the last election. The carbon gift is higher there because it covers a longer period of time than the other provinces and because Albertans spend more on fossil fuels.

You might wonder who’s paying for the carbon gift if it’s revenue neutral. Who is paying more than they receive?  It turns out that businesses are.

For struggling businesses, the carbon transfer seems unfair. But the holdout provinces are responsible for that: if they had devised their own carbon transfer system, the one proposed by the feds wouldn’t be in place. All provinces are free to create their own systems. Presumably, they could devise a system where taxpayers end up giving a carbon gift to small businesses. By refusing to create their own plan, they are accepting the fed’s by default.

B.C.’s carbon transfer is a model for the rest of Canada to follow. Businesses are not hurt –in fact they receive a reduction in taxes, as do personal taxpayers. Introduced in 2008, it has reduced per-capita emissions by 12 per cent and contrary to what conservatives claim, it hasn’t hurt the economy.

B.C.’ carbon transfer is also a model for conservatives because it was introduced by the BC Liberals, a conservative government. If the BC Liberals could introduce a carbon transfer and get re-elected, any conservative government could.

Pricing carbon is an easy sell to voters because most Canadians agree on pricing pollution, led by BC (84%) and trailing in Alberta where it’s still a majority (69%). And if there is no net cost to taxpayers, what’s not to like?

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Canadians support carbon pricing

Canadians, including business groups, support Trudeau’s proposed carbon-pricing plan announced Tuesday. So why are some politicians opposed? The short answer is politics, although games are being played by both sides.

image: Werner Antweiler

Recent polling from Environics Research shows that nine out of ten Canadians are concerned about climate change. And a majority support carbon pricing except in Alberta and Saskatchewan. Tony Coulson from Environics Research says:

“For many Canadians, it appears their concern about the consequences of climate change is strong enough that they’re willing to bear some cost to help stop it (Globe and Mail October 16, 2108).”

The feds say that they will collect carbon taxes from those provinces that don’t have a carbon-pricing plan and return the money directly to citizens of those provinces. Depending on how little fossils fuels they burn, they could get more back in rebates than they spend on the added carbon tax.

Opposition parties are calling it a vote-buying tactic in time for the next election.

Those opposing carbon pricing include Ontario Premier Ford. During his Alberta visit to bolster Jason Kenney, leader of Alberta’s United Conservative Party, Ford tweeted:

“I am proud to say that Ontario will stand with Albertans who oppose this unfair and burdensome tax on families and businesses.”

The Ontario Premier has allied himself with Saskatchewan Premier Scott Moe in opposing the federal tax plan. Manitoba also recently cancelled its planned carbon tax.

Carbon taxes are directly on the sources of carbon: 70 per cent of them from burning fossil fuels to heat our homes, generate electricity and for transportation.

Ford claims that carbon taxes take money out of the pockets of taxpayers. Not necessarily. A revenue neutral carbon tax such as the one that B.C. has doesn’t. Sure, we pay more for gasoline but receive an equal reduction in taxes elsewhere. As demonstrated in B.C., carbon pricing reduces greenhouse gases and doesn’t harm the economy.

If Ford wanted to take a conservative approach, it would be our carbon tax. A progressive approach would be to take the carbon taxes and directly invest them into sources of renewable energy.

Canadian businesses also support carbon pricing. The business-backed C.D. Howe Institute has recently come out in favour of carbon-pricing. The institute understands both the necessity and practicality of carbon taxes. C.D. Howe policy analyst Tracy Snoddon says:

“The politics of carbon pricing may have changed but the climate change challenge and Canada’s emissions reduction targets under the Paris agreement have not. The economics are also unchanged – carbon pricing continues to be the most cost-effective option for achieving emissions reductions across the country (Globe and Mail October 18, 2108).”

It’s disappointing to see politicians use the future of our planet as a political football.

Canadians want government action. For the first time in polling history, Canadians say that individual action is not working that governments need to step in.  “A slim majority now feels that voluntary action is not enough to address the challenges we face,” says Coulson.

Canadians are waking up to the fact that individual actions, like changing to energy efficient light bulbs, is not working. Only legislated policies will collectively accomplish what we individually wish for.