The PBO itself looked at the indirect impact of the carbon tax not just the direct impact. Yes, I am sure their analysis could also be challenged but their conclusion was that (i) if you just look at the fiscal impact (direct cost), 60-80% of the population will get back more than they directly pay, and (ii) if BOTH the direct (fiscal) and indirect (competitiveness) are taken into account, then 60-80% of the population are worse off. https://distribution-a617274656661637473.pbo-dpb.ca/7590f619bb5d3b769ce09bdbc7c1ccce75ccd8b1bcfb506fc601a2409640bfdd
One criticism I have heard of the PBO indirect analysis is that it fails to take into account the cost of climate change if we do nothing. At first blush, the issue I have with this criticism is that it seems to assume that if we impose a carbon tax to tackle climate change then we won't inevitably bear the costs of climate change in any event. However, given that China, for example, is responsible for about 32%of carbon emissions while Canada is responsible for only 1.5% of carbon emissions, even if Canada meets its targets we are still going to have climate change if China doesn't get on board (the climate has no borders) and I have no reason to believe they will.
To be candid, there is also an urban bias to this tax that feeds into the politics and I have not seen this discussed much at all. People who live in rural areas often can't avoid the costs of carbon - for example, they often have to drive further (no public transportation) and rely on less efficient forms of energy and this is true even for poor people who live in rural areas.
With the whole emissions debate there seems to be this underlying feeling that each jurisdiction is its own biosphere. Canada could shut down and there would still be emission related climate change. Maybe if we took a more global approach, sending natural gas to coal burning countries might do more good than our increased emissions would do harm. The country assigned targets are not leading to globally planned solutions.
On the issue of taking a global approach, I did see a post by a US climate "expert" who suggested that by far the most "bang for our buck" in terms of reducing carbon emissions would be to convert about 300 of the most emitting coal-fired generation plants in the world (most, but not all, of which are in China) to nuclear energy. His calculations were to the effect that this would cost a mere fraction of the trillions that the Biden administration is proposing to spend on reducing US emissions and would have a much larger impact on worldwide emissions. Of course, most of those ringing the climate change alarm don't support nuclear energy because it does not accord with their own political leaning, when it is clearly the most efficient form of alternative energy by far and does not require the conversion of large tracts of land to inefficient solar or wind farms, which of course have their own environmental problems. If you really believe that anthropogenic climate change is an existential threat to the world that must be tackled now then you should support the expansion of nuclear energy. Luckily, there are at least a few experts who are expressing this view, but they have largely been marginalized by the "progressive" left.
"With the whole emissions debate there seems to be this underlying feeling that each jurisdiction is its own biosphere."
Arguably that describes the stance of the carbon tax opponents, not the stance of supporters of CO2-reduction measures.
Global warming is a collective action problem, and collective action requires individual leadership. The world will pay attention and will respond if countries like Canada show demonstrable leadership with practical economy-efficient policies that are supported by economists, like the carbon tax. The world will also pay attention but not respond favourably if countries like Canada are preaching CO2 emissions-reductions but are not doing anything to walk the talk, and instead free-riding on the efforts of others.
You work for Guibeault? How’s that approach been working? I would say not well. Not only are GHGs not going down we are hurting economically for no great effect. It is small thinking and does not take into account the nature of the planet we live on. GHGs produced in China do not stay in China. They affect the entire orb. At the same time, we, in Canada have far different challenges than say Spain. If Canada can help reduce emissions in other parts of the world that result in an overall reduction of global emissions then it is not relevant that our emissions might increase.
This is a red herring. The tax has been in place at a low rate for only a few years. The tax has proven success in jurisdictions such as BC (stagnant emissions coupled with economic growth) and Sweden (decades of emissions declines combined with economic growth). The tax will achieve measurable progress on emissions reductions here in Canada (a) once the tax rate becomes significant, and (b) once there is no longer a major party that is perpetually contesting the tax, thereby giving businesses uncertainty as to whether to make any investments in response to said tax.
"we are hurting economically"
That is what Conservative partisans with six-figure salaries are claiming, but there are few if any economists who claim that the tax is hurting the economy.
"If Canada can help reduce emissions in other parts of the world that result in an overall reduction of global emissions then it is not relevant that our emissions might increase."
That's not a serious or credible GHG-reduction strategy. If Canada tries to claim credit for emissions reductions that happen in other countries, other countries will *also* attempt to apply the same logic to us and try to claim credit for any efficiency improvements here as well. Since there's no objective way to measure responsibility this way, other countries aren't going to listen to any of Canada's lecturing based on this logic. This scheme is just an effort to put lipstick on the pig that is Conservative Canada's would-be laziness and free-riding.
Canada’s emissions have increased. You say B.C. has been successful. The target was a 16% reduction by 2025. By 2021 the reduction was 3% and most of that was probably due to greater public transport in Greater Vancouver and Covid. When the B.C. government (BC Liberals, but not really Liberals) brought in the provincial carbon tax they immediately cut the provincial income tax which benefitted everyone and more clearly met the stated goal of making the use of carbon fuels a decision that had economic affects. That realistic policy was abandoned by NDP government.
Sweden is going hard into biofuels, district heating, wind, and nuclear power. The carbon tax goes into general government revenues, which they use to build green infrastructure and reduce costs for households. They didn't just put in a carbon tax and sit on their laurels waiting for the market to act.
While I am not an economist, I have a bigger issue with the Parliamentary Budget Officer's report than the absence of counterfactual climate cost calculations (which are admittedly difficult to measure given many abstract contextual factors).
Conservatives have been playing up the economic fallacy of *double-counting the same economic costs* in order to fabricate an imagined negative fiscal impact on the economy. Conservatives have been telling us that the carbon taxes are passed onto consumers (fair enough) but then also telling us that the carbon taxes create new costs for business (which is impossible to the extent that businesses are passing those costs onto consumers). I respectfully believe that the PBO is engaging in this same fallacy in his report when factoring in "Differential impacts on the returns to capital" to the "economic impact" of the tax. What is arguably missing from his report is that while businesses are (mostly) not formal recipients of the rebates, *the rebates offer an advantage for businesses* insofar as they supplement employees' livable incomes and thus depress employees' demand for higher wages. If the PBO is not considering the upside of the rebates to business income, then his report does not really give a proper aggregate value for all the gains and losses to most Canadians (never mind the unmeasured prevented climate costs).
Some businesses are built on export markets where the ability to pass on the cost of carbon taxation is not possible due to competitive factors. So domestic consumers suffer due to carbon taxes passed on by business. Domestic employees and investors suffer due to reduced profitability due to carbon taxation. All of these analyses are extremely complex and easily swayed by assumtions. It is all irrelevant as the US doesn't have a carbon tax so Canada can't have one either due to the high level of economic integration.
You are *double-counting* the costs of the tax, Doug. If the tax is being passed onto consumers, then the business is *not* itself paying a cost. If the tax is not being passed onto consumers, then consumers are unequivocally benefitting from the tax-rebate scheme because they are paying no tax. One proposition or the other is true, and either way the rebates are compensating to create value somewhere in the economy, to whatever extent they are not benefitting the cost-payers.
"It is all irrelevant as the US doesn't have a carbon tax so Canada can't have one either due to the high level of economic integration."
Canada is pursuing carbon tariffs to complement its carbon tax policy, and I don't believe that there are legal experts saying that such tariffs would contradict any treaties of which Canada is a member.
" If the tax is not being passed onto consumers, then consumers are unequivocally benefitting from the tax-rebate scheme because they are paying no tax."
I don't think you are fully addressing his point. If a business can't pass the tax on to its customers (say, if it is primarily an export business) then Canadians may get more back from the rebate then they directly pay in that circumstance, but the indirect costs (less employment in that export industry) will be indirectly borne by all Canadians in the form of a reduction in Canadian economic output. Let me ask you - if 80% of Canadians will get more from the carbon tax than they pay, then why bring the tax in over 10 years? Politically, wouldn't it be an easier sell to bring in the full tax all at once if it just means 80% of the people would be even better off if we did that?
"If a business can't pass the tax on to its customers (say, if it is primarily an export business) then Canadians may get more back from the rebate then they directly pay in that circumstance, but the indirect costs (less employment in that export industry) will be indirectly borne by all Canadians in the form of a reduction in Canadian economic output."
Yes, that is entirely true. But there is no indication that these costs will exceed the benefits for most Canadians, with the exception of one analysis by the PBO. The PBO argued that the indirect costs plus the direct costs exceed the rebate benefits. I suspect that the PBO is himself engaging in double-counting of the same costs, since we don't seem to see other economists replicating his analysis. But even if you dismiss my non-expert critique of the PBO, he himself denies that his report is a criticism of the tax and he acknowledges not having accounted for climate costs prevented by the tax.
"if 80% of Canadians will get more from the carbon tax than they pay, then why bring the tax in over 10 years? Politically, wouldn't it be an easier sell to bring in the full tax all at once if it just means 80% of the people would be even better off if we did that?"
You could interpret that as cognitive dissonance, and it is arguable that the slower that emissions reductions are to startup, the steeper the eventual pricing must be to achieve emissions goals. However, what I believe that the government is trying to do is simply not shock the economy with too much sudden change. Even good economic policies need not be rushed fully into force overnight.
On the first point, here we have a government institution (the PBO) saying that 80% of Canadians will be worse off with the tax, but you are saying we shouldn't believe that? You can at least understand why Canadians are skepticle, I assume? Moreover, I notice that the open letter from economists just parrot the direct (fiscal) analysis and doesn't say directly that the PBO is wrong on the indirect point. So what are Caanadians to believe?
On the second point, I don't find the argument particularly compelling. Isn't a more likely explanation of the delayed implementation is that there is a recognition that there will in fact be significant indirect (economic) costs to the tax and they want that indirect costs to be absorbed over time? If there is no indirect cost, then it seems to be, politically, a very stupid approach not to bring in the tax all at once if 80% of the electorate would be better off, particularly given that a piecemeal approach simply makes headlines and reminds the members of the public who are opposed to the tax every time it increases. Surely then the Liberals should have simply pulled the bandaid off and fully implemented the tax 3/4 years ago so that people (the 80%) could see all the benefits of the tax before the next election?
I think you're right to start with the question of how much pain it's worth inflicting on Canadians in order to minimize our own tiny contribution to a problem that the major contributors are doing very little about.
Assuming for a moment that we do conclude that we have a responsibility to minimize our contribution to the problem (which is tiny in absolute terms but pretty huge in per capita terms), the carbon tax was the most fair solution. It didn't pick favourites and it wasn't biased, it just introduced a neutrally-applied price on contributing to global warming and let people respond to it any way they saw fit: ingenuity, frugality, lifestyle change, repricing their own goods and services, etc.
Yes, the tax was inevitably going to fall more heavily on people who live in rural areas, but if they're more heavily contributing to the problem by heating large properties (in terms of square footage per person) and driving larger vehicles with fewer people in them longer distances, aren't they exactly the people who most need to change their lifestyles? Is the suggestion that there's nothing they can do to live less carbon-intensively?
Of course, all this assumes that we want to change. If we don't, I suppose I'm fine with that, too, but then we'd better raise taxes and put that money into coming up with a good solution to decarbonizing the atmosphere, because if we don't, we're in a world of hurt regardless of whose fault climate change is.
I disagree, respectfully, with your idea that rural areas are contributing disproportionately to the perceived problem of emissions. It's far more complex than your examples - rural areas contain more manufacturing facilities or agricultural development; things that benefit all of us, urban and rural. If you are singling out former urban dwellers that have moved into rural areas to indulge their wealth, that is not what I would consider "rural". But I admit a profound bias for rural people; I am from a farm and was educated in a small town. The dear friends I still have in those places are far from "exactly the people who most need to change their lifestyles". We'd all be so lucky to live with such realistic expectations.
As far as being in a world of hurt, I would ask you to consider "The Adams Law of Slow-Moving Disasters". I think it's right on the mark - if climate change obsessed western governments can stay out of the way, mankind will solve the real problems:
In defence of urbanites who head into the wildness (and those who aspire to join them) if these people are working from home in professional jobs, they're not necessarily going go be more GHG intensive that ordinary suburbanites. JG
Sure, agree completely. But there are some that are quite easily stereotyped, and I was responding to that in Clarke's comment.
It's remarkably easy to get caught up in it all, ain't it? If we were sitting in somebody's living room having these conversations, we'd all be laughing in our beverages of choice and then saying on the drive (walk?) home "No, I completely get what Clarke is referring to, and Gurney is hilarious."
Totally agree. When governments try to solve problems too often the problem becomes worse. Yes they do solve problems, but when faced with an issue they cannot fix they are seldom smart enough to withdraw and “stay out of the way “.
This is a good and thoughtful comment, and my reply to it is getting long enough that I might try to turn it into an article. Thank you for the inspiration!
To generalize, those living in rural areas are tremendous consumers of HP. Options to reduce carbon footprints are either laughably insufficient or only exist in the minds of green activists.
Also, some government policies undermine the ability of rural people to make decisions about carbon emissions that would find favour with pampered urban residents. Just remember that some of those vehicles rumbling down gravel roads with “few occupants” is a parent and child heading towards an urban daycare centre. The Liberals are not recognizing nor properly funding private daycare opportunities that are near rural families. Big City, unionized daycare programs reduces choice and adds to carbon emissions for rural families.
Right, exactly. The political problem with the carbon tax is actually that it's working as intended by dispassionately identifying and inflicting tremendous pain on the people who are producing the most carbon in exchange for the least profit: politicians just didn't realize that those people were the rural poor.
I’m afraid that my cynicism with regard to Liberal policy development clouds whether rural communities are targeted or collateral damage.
The Liberals, generally speaking can’t manipulate policy to generate voter support in rural Canada. They don’t even appear to try, so in a moment of plain speaking, the disproportionate hurt of the carbon tax on rural Canada helps to spread the climate change Gospel to urban voters.
Your cynicism should at least stretch to include the special affection the Liberals have for rural Atlantic Canada. They don't need rural Saskatchewan, but they desperately need rural Nova Scotia.
The countryside has been depopulating on its own for over a century now. Whether the result is tent cities or normal urban life depends on policy choices regarding housing construction.
Whether a molecule is a naturally-occurring and absolutely necessary plant food is irrelevant to whether it's capable of polluting the environment. See for example nitrogen pollution, which causes fish-killing algal blooms in the water and the production of excess ammonia in the air.
Credit to Clare Blackwood for expressing a similar sentiment much more powerfully on Twitter:
"If I went up to a Toronto landlord and said, 'I’m here to negotiate a fair deal for this apartment,' he would laugh, throw me off the roof, and tell the next tenant my broken body was a lawn ornament and charge them an extra $1000 a month for the privilege of looking at it."
The Liberals had exactly one job on the housing affordability file, and that was to keep demand in check by ensuring immigration levels stayed proportionate to growth of the national housing stock. They failed spectacularly. Their sole remaining role on this file is to stand near the thing they've lit on fire and make noises that suggest confusion about how this happened, concern for the fate of the thing now wreathed in flame, and an artfully vague desire to be helpful.
It's now up to provinces and municipalities to decide whether they want to do the *one* thing that would actually make the situation better, which is to embark on an aggressive campaign of zoning and approvals deregulation that would produce adequate home construction rates.
Which would mean engaging in a bare-knuckle brawl with legions of NIMBY homeowners, and while it can be done - as California recently did with its builder's remedy laws - fighting spirit varies strongly by jurisdiction.
I am wondering how the child who is helping out mom by paying a bit of rent scenario will play out. Does mom say she has a renter to help her son out and thereby gets into another tax bracket or?? The policy has a long way to go before it ever comes into affect. I suspect that it was a quick Liberal response to not looking like they care, and as with most of their policies hasn’t been thought out.
Oh boy, my favourite subject - idiot academic economists. How many of these thinkers have ever disagreed with a single thing the other members of their club said? Did they foresee that low interest rates would create inflation and the giant debt bubble pervasive throughout Canada? Which one spoke up when Tiff Macklem told Canadians in 2020 that interest rates would stay low for the foreseeable future?
One economist with a more cautionary opinion on the effect of carbon taxation is Sylvain Charlebois, head of the Dalhousie University Agri-Food Lab. The establishment is trying to discredit him - you know, the old climate consensus strategy.
These jalukes will never break ranks because it will affect their research dollars and their professional standing. They always have a theory to explain everything, even their mistakes. And look down that list - tell me which one of those economists have ever voted anything but Liberal or NDP? I am betting they will happily try to trivialize any "conservative" opinion.
We are suspending belief because some elites have told us to. Economists - the ones sharing the same brain - are telling us that our current level of carbon taxation has a microscopic effect on inflation. Think about that - how on earth does 21 cents a liter on diesel or a carbon tax 200% the price of natural gas not affect everything that needs either one of those to be produced or transported?
As my dear departed father used to say, "I don't need to be hit in the face with a shovelful to know what shit is."
Tell you what - go through the Sunshine List for each one of these names, and get back to me with the median annual remuneration. I am betting it's not poverty line income, and I also bet there aren't enough of them pushing a grocery cart on a weekly basis to form a two minute line at the self checkout.
No, those economists are not making wages similar to that of poverty levels - and neither are the leading opponents of the tax, such as the Premiers, and particularly Mr. Poilievre who has been making a six-figure salary since his mid-20s!
I literally argued with 3 of those economists on Twitter back in 2012 because they were defending a disgraced Conservative policy (the 31-year Canada-China FIPA) without adequate consideration of relevant legal expertise. Your insinuation of a partisan bias is baseless.
You made great points about economists/experts weighing in on the Carbon Tax (CT) and not reading the room. You are 100% correct on that note My favourite comment on 'experts' was Dr Tam saying masks didn't work, then that we could use them then that 'oh my God, get a mask or stay the heck home!!!" (I paraphrase) and let's not forget that keeping travel from the source country was 'RACIST' (imagine big booming voice for that one).
As to the rental idea, yes he is reading the room but, unfortunately, he has missed the point. If you are paying $2,000 a month for rent how are you going to save for the downpayment for then house/condo/shed? That is the issue because, keep in mind, that the landlord has bills that are going through the roof and he has to deal with the poor tenants who wreck stuff and stiff him on the rent - no offense to the good renters who are the majority but ...
Now to the CT and the effect on our economy - personal and business. My better half and I are on fixed pensions - mine was fixed 17 years ago but, thankfully, CPP has helped. I did a quick calculation on the CT and GST on the gasoline and diesel for our vehicles and the taxes on natural gas to heat the house and just those three items exceeded our rebate. Now calculate in that every single thing that you buy has been on a truck and/or train in Canada - those shippers are not swallowing the CT and GST on same but passing them on. The shop owner who is selling all the items is paying more for his heat and electricity and where does he/she recoup those costs - look in the mirror bucko!
As a side note, if a CT is such a great idea, why are only 14 countries in the world using one? That would be just 7% of countries in the world.
My point is that it is easy to look at the CT in isolation and say it is not having an impact on the individual but common sense tells me that the 'experts' are being less than honest. There has NEVER been a tax that helps people by giving them more money. Also, keep in mind that the sales job was to reduce greenhouse gas emmissions NOT to redistriute money from rich to poor. Our carbon emmissions only dropped during COVID when we were all at home or doing very littel travel.
By the by, I don't believe the excuse that if there is no carbon control program that a country will be penalized financially. If that were the case i'd be seeing a lot less stuff from China and India to name just two. Companies will buy from the lowest cost supplier no matter the carbon footprint of the source country.
Oh, hint to the listener, redistribution of wealth from the wealthy to the poor does not encourage the poor to get an education and work to find a better life. What it does is discourage people from trying to get ahead and start a business or employ folks or get an education because the money you earn will be removed and given to your poor cousin who never tried in life and ignored all his opportunities. How'd that work for the USSR or North Korea? Think I exagerate - think again. Our civil service has increased substantially with no increase in service but an increase in 'controls'. $42 million spent on the gun buy back program without actually, you know, buying any guns back and the criminals are still getting their guns with no increase hindrance from the government.
If we do not wake up to what is happening in Canada we will be a third world outfit in jig time. I'm on the back nine but Jen, your kids are young as are our grandkids and I'm not seeing a rosey picture of their future.
I believe what you wrote is pretty much what Carolyn Rogers (senior deputy governor) was saying. I have a step daughter and her two adult kids who have no desire to work. They sincerely adore the people who redistribute wealth to them; and literally laugh at folks who are paying taxes. Canadians really don’t produce much of anything anymore. We are gutting our energy sectors, when energy is really a very good thing in our cold Canadian climate.
Like you, my husband and I are on the back nine and resent the ‘socialist’ plans that the government distributes without needs assessments. Surely with all the new civil servants needs analysis can be done rather than ‘universal’ money give aways. Or we can always get some contractors to build a really expensive application.
Thanks for that Carole, truer words and all that .. I often remark that if our parents had given us everything we had ever wanted (different from need) what would we have amounted to in life? One need only look to generations of welfare recipients to see what we reap when we sow a socialist ideology. Don't get me wrong, I believe in helping those with physical and mental issues but I firmly support the notion that if you can work then find a job and if you don't then we'll find one for you in order to get assistance - clean a park, shovel snow for seniors, plant trees or whatever but you need to work to receive. Ah well, 'brighter minds' have brought us to this point ...
John, you write, "keep in mind that the sales job was to reduce greenhouse gas emissions NOT to redistribute money from rich to poor."
The money collected from the tax is going to go somewhere. Unless you want to fault the government for not literally flushing the money down the drain, the only alternatives are to (a) use the money to fund government programs, or (b) redistribute the money back to citizens on a fair basis. (a) is an unsustainable policy because it invests the government in programs that are funded by an unstable revenue source that is supposed to decline (the fewer emissions, the less tax revenue). (b) is the logical conclusion of all of the alternatives being worse.
"As a side note, if a CT is such a great idea, why are only 14 countries in the world using one? That would be just 7% of countries in the world."
Since when do most countries agree on just about any policy at all? There's no international comparison by which the tax is objectively a fringe policy.
Why can’t the money raised go to climate mitigation measures. We are never going to stop climate change so let’s prepare to live with it. Giving it back makes little sense and it is just another leftist redistribution of wealth. Trudeau brags that people get more back than they pay in. Where does that extra money come from?
To make it politically palatable, especially East of the Ottawa River, income redistribution was a key aspect. "You actually make money money and it's those overly ambitious businesses and rich who pay for it" is a feature, not a bug of the carbon tax. Gross.
Canada has natural gas that can produce cheap electricity. We have small nuclear plants that can produce cheap electricity. (Unfortunately, the MSM has turned this extremely efficient and safe energy producer to a scary monster). The need to have an incubator run a 24/7 to keep that baby alive in a third world country seems like a really good business case to me. This is a good way to spend climate dollars and up production and productivity in Canada.
"Why can’t the money raised go to climate mitigation measures. We are never going to stop climate change so let’s prepare to live with it."
You are engaging in begging-the-question fallacy. Carbon taxes have a proven history of working to reduce emissions, Sweden has seen steady emission decreases under three decades of the tax.
"Trudeau brags that people get more back than they pay in. Where does that extra money come from?"
*Most* people. The rich are disproportionately contributing to the tax revenue and thus providing the fiscal room to rebate most citizens more than they pay.
Meanwhile those less well off are subsidizing EVs for the better well off so I guess you are correct, the government is simply passing money around in a giant loop and employing ever more apparatchiks to keep track of it.
…and you did not address the point that if climate change is the issue and carbon taxes are supposed to make people think about alternatives why give the money back? Why is it not going to climate mitigation?
If the tax money went to climate mitigation, it would complicate budget planning because the tax revenue is *in principle supposed to decline*. The more effectively the tax works as a disincentive, the more the revenue will decline - you cannot fund and plan government mitigation programs on this basis. (Not to mention that the tax will bring in more revenue than will be imminently needed for climate mitigation.)
You could also cynically say that the rebate works as a bribe to the populace to make peace with the tax, which is merely to say that a policy can have multiple or mixed motives and still serve all those purposes. The tax systematically works to reduce emissions regardless, when applied consistently and at a high enough rate.
That is an unsustainable policy because it invests the government in programs that are funded by an unstable revenue source that is supposed to decline (the fewer the emissions, the lesser the tax revenue). Not to mention that allocating the money to government programs would politically give Poilievre more ammunition, not less, in his misrepresentation of the tax as a liability to most Canadians.
Among the problems with a carbon tax is how do you avoid it? The notion is reduce the activities of expenditures that attract tax and shift to activities that don't. Some taxes, income for example, can't avoid getting taxed but consumption taxes can be avoided to a degree by avoiding consumption. Governments routinely tax things that are assessed as 'bad' for you - e.g. alcohol, cigarettes, and, in these enlightened times, carbon emissions. Trouble is you don't have to consume cigarettes or alcohol to live - consumers can decide whether or not to pay the tax and consume the item in question. Indeed, your life may well be enhanced if you don't consume alcohol and cigarettes (albeit there will be tears in government treasuries around and about should these revenues disappear).
Unfortunately, carbon emissions cannot easily be avoided, particularly in the short term. There is not enough industrial capacity to replace with any speed all our cars, trucks, trains, ships, furnaces, and so on (I think jet engines for aircraft are beyond correction - I stand to be proved wrong). This transition will take decades - no one will, for example, replace their furnace with a heat pump until their furnace falls apart. A high efficiency furnace powered by natural gas will set one back some $6-8K. A heat pump will set you back $14-18K. For some people both options are a financial disaster - for others no worries. But most people will certainly not replace their heating 'unit' until absolutely necessary. And, on top of that, their aren't enough heat pumps available to install at current rates of furnace replacement. Ditto with cars/trucks and so forth. So, it basically means that the carbon tax is indeed a tax. You have no option and you have no real alternatives. Hence the role of regulation - we all agree the less theoretical optimal route to paradise. Eventually, regulation requiring the replacement of worn out furnaces, cars/trucks by non-emitting as the 2030s shift into the 2040s will do the trick.
It will not happen by 2030 or 2035. Industrial capacity is not to hand, nor is financial capacity of the general public to do it any faster. The tax doesn't help this situation.
The other problem is that advocates note that the application of a carbon tax will make the alternatives financially attractive. What is missed is that the alternative is far more expensive than the emitting technology. So, taxes make the $14-18K heat pump cheaper than than the natural gas furnace at $6-8K plus the $10K carbon emitting tax to operate it. Yay. Something that cost far less in the good old days now costs far more - standard of living falls. That is, money that would have been employed in sending one's family to Mexico to avoid 10-days worth of winter, won't happen because the cash has gone in the support of one's home heating. The priority is obvious. The absence of a nice beach in February is sad but, good news, you won't be contributing the GHG emissions associated with the flight to the aforementioned Mexican beach.
I lean toward regulation notwithstanding its economic inefficiencies. I simply think it is doable and avoids multiple years of paying a tax you cannot meaningfully avoid.
Your argument wholly ignores the economic effects of the rebates. If you have truly reduced your consumption of CO2-emitting goods to the bare minimum, then congratulations: you are definitely one of the citizens receiving more income from the rebates than you are paying through the tax.
The tax of course takes away money from certain sectors of the economy, but the rebate of course moves the money to other parts of the economy. The Conservatives are pretending that the carbon tax revenue simply disappears from the economy, which is at odds with everything we know about economics.
Which "we" are you referring to??? This group - "if you have truly reduced your consumption of CO2-emitting goods to the bare minimum", or the group that doesn't need iron supplements or red blood cell transfusions?
The Liberals have no idea how correct their own compete screw ups, so their fix for virtually everything is to meddle in other jurisdictions and offer cash - then of course crow like a child who as accomplished something, like tying their shoe laces for the first time! They simply need to be gone for the future Unity of the country because they are regionally divisive and lack any national vision!
Changing our economy starts with changing the business culture in Canada and that starts on Bay St.
My day job is owning and growing a becoming quite consequential capital intensive business in Canada. It's not oil and gas or home building, so I guess that is strike one for me in Calgary. I'm not speaking out of school when I say this, Jen knows who I really am, and Ken Schultz I suspect has figured it out.
Our absolutely biggest issue in Canada in business is the lack of capital for growth business. There is capital for value investment, businesses with "big moats" built by Ottawa, for land and real estate. It's dead easy to get financing for farm land for instance, even today, but for growth, lol, I've never even been to Bay St to raise money. City of London, Dallas and Wall St. indeed. Even Abu Dhabi, but not Canada.
Why? Because Canadian finance and ultimately our 0.1% asset rich established class doesn't believe in us. I know them, many if not most have assets outside Canada and even a second passport. They just refuse to invest in Canadian growth business, and without the fuel of investment you can't grow and can't invest in productivity. I've been asked to move my business to the US quote "to make it more attractive to capital." I shouldn't have to do that.
We have an ambition problem in Canada, but that comes from the very top down, and I don't see that changing. That's why I highly suspect the feds want so much wealthy immigration, to bring in people who actually want to build something and aren't shy about wanting to be rich.
It's why I'm so hard on our elites in Canada, they suck as elites, they aren't good leaders, and they are quite frankly risk adverse and lazy. I say this with first hand experience. They would rather take a 7% return than go for that potential 10x ten bagger. Anthony Lavacera wrote about it if you are interested.
Ultimately Canada is lead by technocrats instead of wannabe plutocrats and it shows.
I can’t argue with what you are saying. At some point, profit became a bad word in Canada. All big companies that make a profit are ’bad’. Even small companies that make a profit are bad. Politicians who should be promoting entrepreneurs almost universally condemn people making money as ‘profiting off the backs of’ and here you have to pick who businessmen are profiting off of, as it appears every business in Canada is making money while screwing someone else.
I believe that there are still people in Canada who have ambition, but they have little help from anyone. In Washington State (maybe this has changed now) you can get a business license in about 10 business days. It can take months in Canada, and that is just reading all the by-laws. Okay, but talk about over-regulated.
Talented people have a far better chance of getting ahead in other countries than in Canada. There is some kind of bias against ambition and entrepreneurship. It is sad and frustrating. The pathetic story is that the elites just don’t care. Bankers will only give you money for startups if you have money of assets that can be quickly liquidated or you know ‘someone’.
There may be an answer, but I don’t know what it is.
The answer for those who want to stay in Canada, move to Alberta. The "Texas North" thing is only repeated by those who have never actually lived in Alberta but it's most definitely the most "America like" when it comes to culture, business, ambition and entrepreneurship. 2nd place isn't even close to Alberta. Calgary is a city where it is okay to say "I want to be successful." Why? I don't know, but being a business person is socially acceptable in Calgary. Alberta is also set up for entrepreneurs from the legal framework to the ancillary services available. All it lacks is US levels of access to capital, and the old timers are right, Bay St sucks for growth businesses.
I truly think that with available and plentiful capital everything else can be managed or worked around, include the "loser" culture in many parts.
Want to grow productivity in Canada? The absolutely first thing to do is blow up every single protection our finance industry enjoys. Get rid of all of it. Allow all players in to provide all services, including fintech.
Our "stable" banking system is killing the country literally.
I live in Alberta and there is no place in Canada like it. Alberta has some common sense (so does Saskatchewan). I was reading something a while ago that said that if you want money, make some comments about ‘climate disaster’ and how whatever your business fixes, it will do something that will help to save the planet and/or how you will be a DEI employer.
This, they wrote was the fastest way to get grants or loans. Once you get the money, they won’t check up on you. These ‘lenders’ have to tick boxes when they give out money.
I don’t know if it is true, but it sounds like it might be. Back in the dark ages when I was stating businesses in Alberta, I went to the bank with a marginally good business case and a bit of my own money. That was all that was needed.
The defence of the carbon tax based on people getting as much, or more, money back than they pay is utter malarkey and it passeth human understanding that any sentient being can be sufficiently credulous so as not to dismiss it as such in a nanosecond.
Let us review some very basic facts:
1. Energy feeds into EVERY aspect of what makes modern society work.
2. Cheap and plentiful energy facilitates technological advance and supports a high standard of living.
3. Deliberately making energy more expensive causes a decline in standard of living by making everything more costly.
4. Deliberately degrading people's standard of living tends to make them grumpy.
5. Grumpy people in the voting booth tend to toss sitting governments into the trash bin.
Definition: Climatard - a person who actually believes they can change the climate by paying a tax to a government. Seriously, what kind of buffoon could actually believe that paying a carbon tax to a government that gifted us the ArriveScam fiasco, the passport boondoggle, and couldn't run a lemonade stand, to be a value-add proposition in a world where even if Canadian carbon emissions went to zero it would not move the temperature needle? The whole business is beyond preposterous.
So why then does the carbon tax exist? Simple - to allow our virtue-signalling Prime Minister and his minions to puff up their chests, declare they are helping to save the planet, and preen and prance about as virtuous do-gooders on the world stage.
I certainly do not believe the carbon tax is to be a major component of inflation, but it is a contributor, and given the foregoing, it is an utterly unnecessary and self-inflicted one.
As to the carbon-tax boosting letter from the economists, well, what can I say beyond that not for nothing is economics called the "dismal science". These are the same clowns who have predicted 10 of the last 3 recessions, were taken by surprise by the 2007-08 financial crisis, dismissed recent inflation as temporary, have no problem with profligate government spending and bloating of the public sector, came up with "modern monetary theory", and on it goes. Look to just about any NGO or advocacy group and you will find economists on staff who support that group's position - basically by cherry-picking data, ingnoring many aspects of the real world, and "torturing data until it confesses". As for these carbon-tax cheerleaders, as Jen notes by sticking their head above the parapet they have made themselves a legitimate political target, in no small part by coming to the defence of a government that has so fouled up management of the economy that anyone supporting them is likely to be labelled as a bloviating incompetent by mere association. Pollievre surely recognizes this and will fully exploit it - and good for him for doing so.
Actually, "virtue-signalling" is a good thing in the context of preventing global warming. It is precisely when one country takes a lead on cutting CO2 emissions that it has the credibility to lecture and nudge other countries into taking their fair share of action on a *collective-action problem*.
Like that of many other critics, your analysis is predicated on pretending that the rebate money funded by the tax does not exist and that the tax revenue mysteriously disappears from the economy with nothing to show of it.
We should be skeptical of anyone who generalizes about the economists on their letter and yet who will not even speak just 1 of the economists' names. That is a poor way to show expertise about the self-proclaimed experts.
"coming to the defence of a government that has so fouled up management of the economy that anyone supporting them is likely to be labelled as a bloviating incompetent by mere association"
Except that criticizing a policy stance by an opposition party is not tantamount to a blanket partisan endorsement of a sitting government's platform - period.
Virtue signalling is a “good thing”, enabling Canada to “lecture and nudge” other countries? How is that working out with China and India where coal-fired power plants are popping up at breakneck speed? https://www.reuters.com/business/energy/cop26-aims-banish-coal-asia-is-building-hundreds-power-plants-burn-it-2021-10-29/. Do you seriously believe that any country, least of all China, or India (where our dear leader made an ass of himself on a visit several years back) is going to adjust its policy because of Canadian virtue-signalling, particularly when the lead virtue signaller is Justin Trudeau, now pretty much a global laughing stock?
As to not speaking any of the economists’ names – OK, since you deem that of some value, let’s do so. How about Stewart Elgie, University of Ottawa, who is the “Jarislowsky Chair in Clean Economy”. Gee, I wonder where his research funding comes from, and on what it is predicated. Or Tom Green, Senior Climate Policy Advisor of the David Suzuki Foundation – now there’s an objective organization. Looking at the broader list, nearly every single one resides in Academia. I wonder how signing on to a letter supporting the carbon tax might possibly affect their research funding.
I did not say the economists’ letter was tantamount to blanket partisan endorsement of the Liberal government’s platform in totality – no economist would be so stupid as to do so, particularly given the unwavering incompetence of this government.
"Do you seriously believe that any country, least of all China, or India (where our dear leader made an ass of himself on a visit several years back) is going to adjust its policy because of Canadian virtue-signalling, particularly when the lead virtue signaller is Justin Trudeau, now pretty much a global laughing stock?"
Having a carbon tax doesn't overnight make other countries look up to Canada, no. But while different countries have different levels of responsiveness to global perceptions, every country around the world is paying at least some attention to what some of its friends are doing. When one countries lead, other countries will follow, and when multiple countries lead, many other countries will follow. The current weak link in the chain of inspiration is however the Conservatives, who want us as a country to ignore the obvious precedent set by the likes of Sweden and Norway.
"I am sure a portion of it, for example, went into paying for the ArriveScam app, and some perhaps went to paying for the chairs purchased by the federal government for those poor souls in Montreal waiting days in lineups to get passports."
It is the case that less than 100% of the carbon tax revenue is being returned in rebates, but I am not aware of any reporting confirming that any of the carbon tax revenue is going into the budget. Do you know of a specific report to the contrary?
"Looking at the broader list, nearly every single one resides in Academia. I wonder how signing on to a letter supporting the carbon tax might possibly affect their research funding."
Academia doesn't work the way that you are hinting. Academics from all subjects criticize all governments all of the time and are safe to do so, because the process through which money flows from government to specific academics is mediated by a long lineup of actors each accountable to various different authorities and constituencies. There is no chance that a single open letter determines the level of funding to a specific university, and people who most closely control an academic's access to funding are themselves quite distant in accountability to government.
I interacted via Twitter with several of the economists on the list over a decade ago, I can personally testify that they supported carbon taxes when there was a Conservative government in charge, and that they defended a Conservative policy (the 31-year Canada-China FIPA) despite my personal criticism of them. Though not on the open letter, Sean Speer is a notable policy advisor who was appointed by Stephen Harper yet who publicly advocates for carbon taxes.
Sigh again ....... I concede that some around the world are paying attention to what Canada is doing, but only with a mix of pity, contempt, ridicule, and incredulity. I have plenty of international contacts and I can assure you not a single one of them are looking at Canada as any kind of "leader".
As to what is happening with federal budgets and tax revenue, just read any one of the Auditor General's annual reports for the last 10 years. No need to read them all - just one will do - the same fiscal malfeasance repeats itself year in and year out.
As to not following Sweden's example? Well, I sure wish we had parroted their response to COVID, when Sweden was perhaps the ONLY country in the world that followed the pandemic script that had been developed before COVID arrived and everyone set their hair on fire. In any case, as you surely know, Sweden (and Norway) are blessed with hydroelectric power, and they are happy to use nuclear too (which I see as the real solution, not solar power and windmills). Further, I am unaware of Sweden being particularly blessed with hydrocarbon resources. As to Norway, much of their large oil and gas sector is state owned, so it is all well and good to virtue signal with a carbon tax when it hardly makes a dent on the oil and gas export revenues going directly into government coffers. I am amazed that anyone would cite Norway as a carbon tax success story.....
As to Academia not working "the way that you are hinting", sorry, yes it does. In Academia, follow the money......and if you do not belief that ideological capture is not a problem in academia, you are wilfully blind. Further, I tend to put more stock into the musings of academics when they face significant consequences for being wrong.
In the Liberal world, you only get a government grant if you are aligned with climate alarm. So, anyone wanting grant money has to tow the line. Some of them probably believe what they are saying, but it is a follow the money game – I get money if I create climate alarm by saying the sky is falling. I get no money if I say that the climate appears to be warming because the winters are getting warmer, so on average, it looks like we are getting warmer, rather than having milder winters. Shell game at best.
"I concede that some around the world are paying attention to what Canada is doing, but only with a mix of pity, contempt, ridicule, and incredulity. I have plenty of international contacts and I can assure you not a single one of them are looking at Canada as any kind of "leader"."
Red herring. We are not debating what the current status of Canada's reputation is (or your non-objective assessment thereof), but what hypothetical leadership would look like and how it would inevitably require climate leadership that is made easier by the tax.
"As to what is happening with federal budgets and tax revenue, just read any one of the Auditor General's annual reports for the last 10 years. No need to read them all - just one will do - the same fiscal malfeasance repeats itself year in and year out."
Red herring. Reports faulting the transparency of federal budgets are not tantamount of evidence that any of the carbon tax revenue is specifically going into general programs.
"Well, I sure wish we had parroted their response to COVID, when Sweden was perhaps the ONLY country in the world that followed the pandemic script that had been developed before COVID arrived and everyone set their hair on fire."
Red herring.
"As to Norway, much of their large oil and gas sector is state owned, so it is all well and good to virtue signal with a carbon tax when it hardly makes a dent on the oil and gas export revenues going directly into government coffers. I am amazed that anyone would cite Norway as a carbon tax success story....."
The carbon tax is supposed to affect domestic emissions, not necessarily foreign emissions. But if every country adopted Norway's carbon tax regime, Norway's fuel exports would decrease (or become less GHG-intensive through innovation). Your point is another red herring.
"As to Academia not working "the way that you are hinting", sorry, yes it does. In Academia, follow the money......and if you do not belief that ideological capture is not a problem in academia, you are wilfully blind."
You are just throwing out an insult at a broad profession with nothing to show for it beyond your own undemonstrated self-claimed authority on the matter. And we were not discussing "ideological capture", we were discussing the tying of government money to academic advocacy of a very specific policy, something that you cannot prove.
The renters bill of rights is (as I understand it) is a copy paste from similar laws in the US. As mentioned in the podcast, inherent in the US renter rights initiatives is an epidemic of squatters. This is a nightmare. Homeless encampments, opioid crisis, productivity collapse, and now coming soon, NY State squatter style crisis! JT must have taken the RCMP safety report as a challenge and not as a warning. I expect purge sirens by the end of this PM’s term.
It is clear to me that whether you think Trudeau is on the right side of the debate or Polievre is on the right side of the debate. Living in Canada is way more expensive than it was five 10 years ago. I believe it's the government's responsibility to do everything they can to mitigate this issue. If that means eliminating the carbon tax so that our economy becomes more vibrant and that we start seeing a lessening of living costs, then do it.
On Matt's point about Liberals being unable to sell income redistribution, it's worth remembering that in the 2015 campaign they did sell a redistributive income tax scheme as a major platform plank.
The main promise was to raise the federal rate on taxable incomes over $200k from 29% to 33%, while reducing the rate on taxable incomes from $44.7k to $89.4k from 22% to 20.5%. Pure redistribution (or it would be if the tax hike were big enough to pay for the tax reduction, which it wasn't at all, but that's not my point here).
Many wonks pointed out at the time that the biggest beneficiaries, people earning around $89k-$200k in taxable income, more in gross income, were decidedly upper middle class, and that low to middle income people benefitted not at all. Ya, said the Liberals, but these people are hard done by. Try to live on a schoolteacher's salary.
Fast forward to the carbon tax, and now the upper middle class are the people who have to pay more than they get back, to fund net wins on "rebates" for (by StatsCan reckoning) 94% of people earning under $50k. The very same salt of the earth mid-career schoolteachers who were the deserving middle class in the 2015 Liberal platform are now the idle rich who should be grateful to pay more than they get in the carbon tax scheme.
One can perhaps defend either of these plans depending on one's priorities. But Liberal definitions of the evil rich and the deserving middle class are decidedly circumstantial.
As someone who will be voting Conservative in the next election, I do find the whole debate about the carbon tax rather amusing. I have always thought that if we decide as a country that carbon emissions need to be reduced, then a market-based mechanism like the carbon tax is the most efficient way to do it as compared to the alternatives (though why, as Jen points out, the Liberals contrinue at the same time to pursue those less efficient alternative -- such as EV subsidization -- while also introducing a carbon tax is a mystery to me, but such is the schizophrenic nature of Canadian politics). There are many, many reasons to criticize the Liberal government, which I don't need to canvass ad nauseum here, but suffice to say that under their watch we have seen a massive drop in the productivity of the country and a precipitous decline in foreign investment, all while they have pursued class-based wedge issues for political gain and have embraced identity poliitics (and performative politics) full scale. We have also seen them introducing more and more expensive social programs in the face of increasing budgetary deficits, all while existing social programs (healthcare among them) faulter and decline. It is ironic to me that one of their policies that I find the least offensive (the carbon tax) may be their undoing. But then, we saw this back in 1993 when the Torys were tossed for replacing an inefficient tax on manufacturing with a broad-based and much less distortionary value-added tax, so perhaps what goes around comes around.
If the Conservatives win a majority in the next election, I believe they will eliminate the carbon tax on the retail side (how could they not, given their current positioning on the issue) but I also believe they will keep the carbon tax on the industrial side -- recall, that the Liberals have enterred into multiple agreementts with industry participants to guarantee carbon pricing so it would cost the Torys a fortune to break those contracts. All of this means of course that Canadians will continue to pay the carbon tax, except that it will be hidden.
I’ve learned over the years to be very cynical about the musings of economists who in my humble opinion frequently propose academic theories and lure politicians into applying them to action through the use of policy. Frequently the results in the real world don’t necessarily match up to the theory leaving those used to prove the theory to suffer the consequences.
In my line of work economists have a very poor track record for helping businesses make good financial decisions to position themselves from the short to medium term. This isn’t the disparaging comment that it might seem to be either. Why? Because “stuff” happens that is entirely unpredictable but turns markets upside down.
How many economists sized up the pent up consumer demand in the declining days of the pandemic and predicted hot house inflation and high interest rates? Many were more concerned about deflation, but that is a serious “miss” that might have helped shape Government spending decisions that would help limit loose money in the market place.
But there have been many examples through history of politicians ignoring the advice of economists and suffering consequences accordingly. For example, economists were early opponents of slavery, an institution great for slave-holders but awful for maximizing potential societal wealth. As a layperson, all you can really do is look at debates on a case-by-case basis and try to independently judge if the proclaimed experts actually are studied on the policy debate in question or studied from a position without short-term stakes in the matter.
The problem with the carbon tax is 2-fold. I’m not against it in principle but these issues have to be acknowledged and addressed.
The first problem is that there are no reasonable alternatives for the vast majority of Canadians. A few examples. Transit is abysmal in this country. Very few people have 20k lying around for a heat pump. Electric vehicles are double the cost of combustion engine vehicles and the infrastructure needed for their use doesn’t exist at the necessary scale. There is no chemistry alternative to the Haber reaction (needed for nitrogen based fertilizer and the only reason the planet has this many humans) than to use petroleum. Rail in this country isn’t large enough to replace trucks. In other words, people just have to absorb the costs because they can’t reduce their use because there is no meaningful way to do it.
The second problem is the rebate. Right now, it serves as a wealth redistribution scheme. Based on the calculation, it punishes families because their total footprint is bigger (larger home, larger vehicles to move the kids) compared to single individuals even if the single individual has a larger footprint per person. We are supposed to helping the environment, not transferring more money than taxes to individuals. The rebate also prevents investment into things that will help, such as transit, that would actually allow people to reduce their footprint.
The tax should only apply to urban voters, the money should go into transit for urban voters, governments have to improve their game with infrastructure (no more BS like the Eglington line or the Ottawa LRT in terms of quality and time for construction) and as new infrastructure comes on line, the tax goes up accordingly to change behaviour.
EV’s have no trade in value and insuring them is pretty costly. Hell buying them is pretty costly. Car manufacturers are no longer manufacturing them. I guess there is no longer a business case – hopefully we can sell those batteries that we have spent billions to make.
Transit is not only abysmal; it is very scary and not well policed in the larger Canadian cities. Small cities can’t afford a brilliant transit system. Too few people.
Heat pumps are expensive and generally don’t work after -20. Alberta, January 12, 2024 – 38 all-time cold records were broken – all about -40
It seems to me we should have adult conversations about the carbon tax and climate change.
"Based on the calculation, it punishes families because their total footprint is bigger (larger home, larger vehicles to move the kids) compared to single individuals even if the single individual has a larger footprint per person."
Where is your information on that claim coming from?
"The rebate also prevents investment into things that will help, such as transit, that would actually allow people to reduce their footprint."
That's a dubious claim. Governments are left with as much money after the tax as without the tax, so the tax-rebate scheme certainly does not prevent governments from making any particular infrastructure investments.
"The tax should only apply to urban voters, the money should go into transit for urban voters"
That would create arbitrary incentives in the tax, if blanket rural exceptions are even possible to enforce. How would you tax the supply chains in such a way as to make that happen, other than exempting gas stations in the countryside? In that case, you would create the arbitrary incentive for urban-dwellers to in some cases simply travel to the countryside to fuel up. The tax needs to be applied on a consistent basis to all emissions if it is going to be very effective.
The basis for the rebate is in the globe and mail. For example, it calculates the rebate based the “average” living space, so condos are highly favoured over houses. Therefore, a family of 5 in a 2000 sq bungalow gets less back than a single individual in a 750 sq foot condo.
In addition, you have to cut rural areas slack because options to lower carbon is less cost effective there compared to urban areas.
I cannot find the Globe report to which you are referring. I found this on one Globe commentary: "The tax is paid based on how much carbon you consume, but rebates are based on family size." https://www.theglobeandmail.com/business/commentary/article-we-have-met-the-enemy-of-the-carbon-tax-and-it-is-us/ If the rebate is based on property size, something traditionally taxed by municipalities, then I am surprised because most of the critics of the tax I have come across have never cited this obvious would-be oversight.
The problem comes back to the fact that the Liberals were hoping to buy votes with the program while trying to say they were addressing climate change. Good policy doesn’t try to do both. The fact is, why have a rebate at all? Either we need to change or we don’t. The policy does nothing to drive change because there is no investment in making change.
Here’s another example of shitty policy. High frequency rail. Cutting 15 minutes off of a journey isn’t going to get anyone of short haul flight routes. The latest plan includes Quebec City, which is NOT in the major corridor, but excludes Ottawa which has 4x the population and is in the major corridor. Why? Have to get those Quebec votes, damn effective policy. This is the problem. The good of country is always secondary with this government.
We don’t have the national fiscal capital to screw around. Money is tight and every dollar needs to be used as effectively as possible.
Economists were recommending that the tax scheme be revenue-neutral before the Liberals ever adopted the idea.
The money collected from the tax is going to go somewhere. Unless you want to fault the government for not literally flushing the money down the drain, the only alternatives are to (1) use the money to fund government programs, or (2) redistribute the money back to citizens on a fair basis. (1) is an unsustainable policy because it invests the government in programs that are funded by an unstable revenue source that is supposed to decline (the fewer the emissions, the lesser the tax revenue). (2) is the logical conclusion of all of the alternatives being worse. (Not to mention that (1) as a policy would have only emboldened Poilievre's rhetoric against the tax even more than it already is.)
Agree with what you are saying to an extent but let’s forget rhetoric for a sec. An honest question is what can the average Canadian do to reduce their carbon footprint and thus reduce their carbon tax? Very little. The infrastructure doesn’t exist. Farming and shipping of goods are what they are. Given this, how is the tax going to result in meaningful change?
Trudeau saying if we get rid of the tax people will lose their rebates is the equivalent of Dorothy pulling the curtain back on the wizard. He is telling you that it is a wealth distribution scheme and he is trying to buy your vote. He would never make this argument otherwise.
As always, I really enjoyed the podcast. I wanted to make some observations about the carbon tax and why I think that it is both bad policy and bad politics. The point of the tax is to create an economic incentive to change behaviour. The tax can be avoided or its impact lessened if it leads to people using energy sources other than fossil fuels. Drive less, turn down the heat (or the air conditioning up) or buy vehicles or home comfort sources that are powered by electricity. This is where the policy breaks down. Alternatives are either not readily available or the savings realized will take too long to the consumer back. Let me give a personal example. I heat my home with natural gas. My home is larger than the average Toronto home, but because I have a high efficiency furnace, I use only slightly more gas than the average home. The carbon tax I pay is more than the cost of gas to heat my home. That’s right, the tax is more than 100%. So, should I buy a heat pump? An environmental organization’s web tool tells me that the cost of heating my home would be 9% more with a heat pump than heating with gas. Even if this is left aside, a heat pump will cost me about $20,000. If I did this, I would save the cost of the tax. If we assume that the cost of the tax is $1000 per year (reality is it is about $600 to $700) that is a 20 year payback assuming the heat pump lasts that long and I would be paying more to heat my home. Enough of the policy argument, now for the politics. The tax is a pay now, get your money back later program. If you are living pay cheque to pay cheque, this is an unacceptable burden. What I find somewhat irksome about this conversation is that the rebate is a return of tax, plus a small amount more, for a tax that has already been paid. It is not a grant. For many people a rebate does not work. The money to pay the tax is needed when one pays for their gas at the pump or pays their heating bill. These same people will also find it difficult to purchase a heat pump or an EV. Having just returned from Nanaimo where I visited my son, I saw how first hand what a struggle it is for people who make $25 to $35 an hour to make their way in a small city. We need policy that addresses climate matters. The carbon tax is not the right way to do this. Tax heavy emitters and provide relief to consumers for the costs that are passed on might be a better way. In any event, thanks for the podcast.
The PBO itself looked at the indirect impact of the carbon tax not just the direct impact. Yes, I am sure their analysis could also be challenged but their conclusion was that (i) if you just look at the fiscal impact (direct cost), 60-80% of the population will get back more than they directly pay, and (ii) if BOTH the direct (fiscal) and indirect (competitiveness) are taken into account, then 60-80% of the population are worse off. https://distribution-a617274656661637473.pbo-dpb.ca/7590f619bb5d3b769ce09bdbc7c1ccce75ccd8b1bcfb506fc601a2409640bfdd
One criticism I have heard of the PBO indirect analysis is that it fails to take into account the cost of climate change if we do nothing. At first blush, the issue I have with this criticism is that it seems to assume that if we impose a carbon tax to tackle climate change then we won't inevitably bear the costs of climate change in any event. However, given that China, for example, is responsible for about 32%of carbon emissions while Canada is responsible for only 1.5% of carbon emissions, even if Canada meets its targets we are still going to have climate change if China doesn't get on board (the climate has no borders) and I have no reason to believe they will.
To be candid, there is also an urban bias to this tax that feeds into the politics and I have not seen this discussed much at all. People who live in rural areas often can't avoid the costs of carbon - for example, they often have to drive further (no public transportation) and rely on less efficient forms of energy and this is true even for poor people who live in rural areas.
I wasn't aware that the PBO had calculated the indirect costs as well! Thanks Allan! JG
With the whole emissions debate there seems to be this underlying feeling that each jurisdiction is its own biosphere. Canada could shut down and there would still be emission related climate change. Maybe if we took a more global approach, sending natural gas to coal burning countries might do more good than our increased emissions would do harm. The country assigned targets are not leading to globally planned solutions.
On the issue of taking a global approach, I did see a post by a US climate "expert" who suggested that by far the most "bang for our buck" in terms of reducing carbon emissions would be to convert about 300 of the most emitting coal-fired generation plants in the world (most, but not all, of which are in China) to nuclear energy. His calculations were to the effect that this would cost a mere fraction of the trillions that the Biden administration is proposing to spend on reducing US emissions and would have a much larger impact on worldwide emissions. Of course, most of those ringing the climate change alarm don't support nuclear energy because it does not accord with their own political leaning, when it is clearly the most efficient form of alternative energy by far and does not require the conversion of large tracts of land to inefficient solar or wind farms, which of course have their own environmental problems. If you really believe that anthropogenic climate change is an existential threat to the world that must be tackled now then you should support the expansion of nuclear energy. Luckily, there are at least a few experts who are expressing this view, but they have largely been marginalized by the "progressive" left.
"With the whole emissions debate there seems to be this underlying feeling that each jurisdiction is its own biosphere."
Arguably that describes the stance of the carbon tax opponents, not the stance of supporters of CO2-reduction measures.
Global warming is a collective action problem, and collective action requires individual leadership. The world will pay attention and will respond if countries like Canada show demonstrable leadership with practical economy-efficient policies that are supported by economists, like the carbon tax. The world will also pay attention but not respond favourably if countries like Canada are preaching CO2 emissions-reductions but are not doing anything to walk the talk, and instead free-riding on the efforts of others.
You work for Guibeault? How’s that approach been working? I would say not well. Not only are GHGs not going down we are hurting economically for no great effect. It is small thinking and does not take into account the nature of the planet we live on. GHGs produced in China do not stay in China. They affect the entire orb. At the same time, we, in Canada have far different challenges than say Spain. If Canada can help reduce emissions in other parts of the world that result in an overall reduction of global emissions then it is not relevant that our emissions might increase.
"Not only are GHGs not going down"
This is a red herring. The tax has been in place at a low rate for only a few years. The tax has proven success in jurisdictions such as BC (stagnant emissions coupled with economic growth) and Sweden (decades of emissions declines combined with economic growth). The tax will achieve measurable progress on emissions reductions here in Canada (a) once the tax rate becomes significant, and (b) once there is no longer a major party that is perpetually contesting the tax, thereby giving businesses uncertainty as to whether to make any investments in response to said tax.
"we are hurting economically"
That is what Conservative partisans with six-figure salaries are claiming, but there are few if any economists who claim that the tax is hurting the economy.
"If Canada can help reduce emissions in other parts of the world that result in an overall reduction of global emissions then it is not relevant that our emissions might increase."
That's not a serious or credible GHG-reduction strategy. If Canada tries to claim credit for emissions reductions that happen in other countries, other countries will *also* attempt to apply the same logic to us and try to claim credit for any efficiency improvements here as well. Since there's no objective way to measure responsibility this way, other countries aren't going to listen to any of Canada's lecturing based on this logic. This scheme is just an effort to put lipstick on the pig that is Conservative Canada's would-be laziness and free-riding.
Canada’s emissions have increased. You say B.C. has been successful. The target was a 16% reduction by 2025. By 2021 the reduction was 3% and most of that was probably due to greater public transport in Greater Vancouver and Covid. When the B.C. government (BC Liberals, but not really Liberals) brought in the provincial carbon tax they immediately cut the provincial income tax which benefitted everyone and more clearly met the stated goal of making the use of carbon fuels a decision that had economic affects. That realistic policy was abandoned by NDP government.
Sweden is going hard into biofuels, district heating, wind, and nuclear power. The carbon tax goes into general government revenues, which they use to build green infrastructure and reduce costs for households. They didn't just put in a carbon tax and sit on their laurels waiting for the market to act.
While I am not an economist, I have a bigger issue with the Parliamentary Budget Officer's report than the absence of counterfactual climate cost calculations (which are admittedly difficult to measure given many abstract contextual factors).
Conservatives have been playing up the economic fallacy of *double-counting the same economic costs* in order to fabricate an imagined negative fiscal impact on the economy. Conservatives have been telling us that the carbon taxes are passed onto consumers (fair enough) but then also telling us that the carbon taxes create new costs for business (which is impossible to the extent that businesses are passing those costs onto consumers). I respectfully believe that the PBO is engaging in this same fallacy in his report when factoring in "Differential impacts on the returns to capital" to the "economic impact" of the tax. What is arguably missing from his report is that while businesses are (mostly) not formal recipients of the rebates, *the rebates offer an advantage for businesses* insofar as they supplement employees' livable incomes and thus depress employees' demand for higher wages. If the PBO is not considering the upside of the rebates to business income, then his report does not really give a proper aggregate value for all the gains and losses to most Canadians (never mind the unmeasured prevented climate costs).
Some businesses are built on export markets where the ability to pass on the cost of carbon taxation is not possible due to competitive factors. So domestic consumers suffer due to carbon taxes passed on by business. Domestic employees and investors suffer due to reduced profitability due to carbon taxation. All of these analyses are extremely complex and easily swayed by assumtions. It is all irrelevant as the US doesn't have a carbon tax so Canada can't have one either due to the high level of economic integration.
You are *double-counting* the costs of the tax, Doug. If the tax is being passed onto consumers, then the business is *not* itself paying a cost. If the tax is not being passed onto consumers, then consumers are unequivocally benefitting from the tax-rebate scheme because they are paying no tax. One proposition or the other is true, and either way the rebates are compensating to create value somewhere in the economy, to whatever extent they are not benefitting the cost-payers.
"It is all irrelevant as the US doesn't have a carbon tax so Canada can't have one either due to the high level of economic integration."
Canada is pursuing carbon tariffs to complement its carbon tax policy, and I don't believe that there are legal experts saying that such tariffs would contradict any treaties of which Canada is a member.
" If the tax is not being passed onto consumers, then consumers are unequivocally benefitting from the tax-rebate scheme because they are paying no tax."
I don't think you are fully addressing his point. If a business can't pass the tax on to its customers (say, if it is primarily an export business) then Canadians may get more back from the rebate then they directly pay in that circumstance, but the indirect costs (less employment in that export industry) will be indirectly borne by all Canadians in the form of a reduction in Canadian economic output. Let me ask you - if 80% of Canadians will get more from the carbon tax than they pay, then why bring the tax in over 10 years? Politically, wouldn't it be an easier sell to bring in the full tax all at once if it just means 80% of the people would be even better off if we did that?
"If a business can't pass the tax on to its customers (say, if it is primarily an export business) then Canadians may get more back from the rebate then they directly pay in that circumstance, but the indirect costs (less employment in that export industry) will be indirectly borne by all Canadians in the form of a reduction in Canadian economic output."
Yes, that is entirely true. But there is no indication that these costs will exceed the benefits for most Canadians, with the exception of one analysis by the PBO. The PBO argued that the indirect costs plus the direct costs exceed the rebate benefits. I suspect that the PBO is himself engaging in double-counting of the same costs, since we don't seem to see other economists replicating his analysis. But even if you dismiss my non-expert critique of the PBO, he himself denies that his report is a criticism of the tax and he acknowledges not having accounted for climate costs prevented by the tax.
"if 80% of Canadians will get more from the carbon tax than they pay, then why bring the tax in over 10 years? Politically, wouldn't it be an easier sell to bring in the full tax all at once if it just means 80% of the people would be even better off if we did that?"
You could interpret that as cognitive dissonance, and it is arguable that the slower that emissions reductions are to startup, the steeper the eventual pricing must be to achieve emissions goals. However, what I believe that the government is trying to do is simply not shock the economy with too much sudden change. Even good economic policies need not be rushed fully into force overnight.
On the first point, here we have a government institution (the PBO) saying that 80% of Canadians will be worse off with the tax, but you are saying we shouldn't believe that? You can at least understand why Canadians are skepticle, I assume? Moreover, I notice that the open letter from economists just parrot the direct (fiscal) analysis and doesn't say directly that the PBO is wrong on the indirect point. So what are Caanadians to believe?
On the second point, I don't find the argument particularly compelling. Isn't a more likely explanation of the delayed implementation is that there is a recognition that there will in fact be significant indirect (economic) costs to the tax and they want that indirect costs to be absorbed over time? If there is no indirect cost, then it seems to be, politically, a very stupid approach not to bring in the tax all at once if 80% of the electorate would be better off, particularly given that a piecemeal approach simply makes headlines and reminds the members of the public who are opposed to the tax every time it increases. Surely then the Liberals should have simply pulled the bandaid off and fully implemented the tax 3/4 years ago so that people (the 80%) could see all the benefits of the tax before the next election?
I think you're right to start with the question of how much pain it's worth inflicting on Canadians in order to minimize our own tiny contribution to a problem that the major contributors are doing very little about.
Assuming for a moment that we do conclude that we have a responsibility to minimize our contribution to the problem (which is tiny in absolute terms but pretty huge in per capita terms), the carbon tax was the most fair solution. It didn't pick favourites and it wasn't biased, it just introduced a neutrally-applied price on contributing to global warming and let people respond to it any way they saw fit: ingenuity, frugality, lifestyle change, repricing their own goods and services, etc.
Yes, the tax was inevitably going to fall more heavily on people who live in rural areas, but if they're more heavily contributing to the problem by heating large properties (in terms of square footage per person) and driving larger vehicles with fewer people in them longer distances, aren't they exactly the people who most need to change their lifestyles? Is the suggestion that there's nothing they can do to live less carbon-intensively?
Of course, all this assumes that we want to change. If we don't, I suppose I'm fine with that, too, but then we'd better raise taxes and put that money into coming up with a good solution to decarbonizing the atmosphere, because if we don't, we're in a world of hurt regardless of whose fault climate change is.
I disagree, respectfully, with your idea that rural areas are contributing disproportionately to the perceived problem of emissions. It's far more complex than your examples - rural areas contain more manufacturing facilities or agricultural development; things that benefit all of us, urban and rural. If you are singling out former urban dwellers that have moved into rural areas to indulge their wealth, that is not what I would consider "rural". But I admit a profound bias for rural people; I am from a farm and was educated in a small town. The dear friends I still have in those places are far from "exactly the people who most need to change their lifestyles". We'd all be so lucky to live with such realistic expectations.
As far as being in a world of hurt, I would ask you to consider "The Adams Law of Slow-Moving Disasters". I think it's right on the mark - if climate change obsessed western governments can stay out of the way, mankind will solve the real problems:
https://donalfagan.wordpress.com/tag/adams-law-of-slow-moving-disasters/
In defence of urbanites who head into the wildness (and those who aspire to join them) if these people are working from home in professional jobs, they're not necessarily going go be more GHG intensive that ordinary suburbanites. JG
Sure, agree completely. But there are some that are quite easily stereotyped, and I was responding to that in Clarke's comment.
It's remarkably easy to get caught up in it all, ain't it? If we were sitting in somebody's living room having these conversations, we'd all be laughing in our beverages of choice and then saying on the drive (walk?) home "No, I completely get what Clarke is referring to, and Gurney is hilarious."
"What do you think of Gerson?"
:>)
Totally agree. When governments try to solve problems too often the problem becomes worse. Yes they do solve problems, but when faced with an issue they cannot fix they are seldom smart enough to withdraw and “stay out of the way “.
This is a good and thoughtful comment, and my reply to it is getting long enough that I might try to turn it into an article. Thank you for the inspiration!
To generalize, those living in rural areas are tremendous consumers of HP. Options to reduce carbon footprints are either laughably insufficient or only exist in the minds of green activists.
Also, some government policies undermine the ability of rural people to make decisions about carbon emissions that would find favour with pampered urban residents. Just remember that some of those vehicles rumbling down gravel roads with “few occupants” is a parent and child heading towards an urban daycare centre. The Liberals are not recognizing nor properly funding private daycare opportunities that are near rural families. Big City, unionized daycare programs reduces choice and adds to carbon emissions for rural families.
Right, exactly. The political problem with the carbon tax is actually that it's working as intended by dispassionately identifying and inflicting tremendous pain on the people who are producing the most carbon in exchange for the least profit: politicians just didn't realize that those people were the rural poor.
I’m afraid that my cynicism with regard to Liberal policy development clouds whether rural communities are targeted or collateral damage.
The Liberals, generally speaking can’t manipulate policy to generate voter support in rural Canada. They don’t even appear to try, so in a moment of plain speaking, the disproportionate hurt of the carbon tax on rural Canada helps to spread the climate change Gospel to urban voters.
Your cynicism should at least stretch to include the special affection the Liberals have for rural Atlantic Canada. They don't need rural Saskatchewan, but they desperately need rural Nova Scotia.
The countryside has been depopulating on its own for over a century now. Whether the result is tent cities or normal urban life depends on policy choices regarding housing construction.
Whether a molecule is a naturally-occurring and absolutely necessary plant food is irrelevant to whether it's capable of polluting the environment. See for example nitrogen pollution, which causes fish-killing algal blooms in the water and the production of excess ammonia in the air.
You can also have too much vodka.....
My own reaction to the Renter's Bill of Rights was to immediately recollect the semi-famous "Just Need to Subsidize Demand" meme:
https://imgur.com/a/W1jqirs
Credit to Clare Blackwood for expressing a similar sentiment much more powerfully on Twitter:
"If I went up to a Toronto landlord and said, 'I’m here to negotiate a fair deal for this apartment,' he would laugh, throw me off the roof, and tell the next tenant my broken body was a lawn ornament and charge them an extra $1000 a month for the privilege of looking at it."
The Liberals had exactly one job on the housing affordability file, and that was to keep demand in check by ensuring immigration levels stayed proportionate to growth of the national housing stock. They failed spectacularly. Their sole remaining role on this file is to stand near the thing they've lit on fire and make noises that suggest confusion about how this happened, concern for the fate of the thing now wreathed in flame, and an artfully vague desire to be helpful.
It's now up to provinces and municipalities to decide whether they want to do the *one* thing that would actually make the situation better, which is to embark on an aggressive campaign of zoning and approvals deregulation that would produce adequate home construction rates.
Which would mean engaging in a bare-knuckle brawl with legions of NIMBY homeowners, and while it can be done - as California recently did with its builder's remedy laws - fighting spirit varies strongly by jurisdiction.
I am wondering how the child who is helping out mom by paying a bit of rent scenario will play out. Does mom say she has a renter to help her son out and thereby gets into another tax bracket or?? The policy has a long way to go before it ever comes into affect. I suspect that it was a quick Liberal response to not looking like they care, and as with most of their policies hasn’t been thought out.
Oh boy, my favourite subject - idiot academic economists. How many of these thinkers have ever disagreed with a single thing the other members of their club said? Did they foresee that low interest rates would create inflation and the giant debt bubble pervasive throughout Canada? Which one spoke up when Tiff Macklem told Canadians in 2020 that interest rates would stay low for the foreseeable future?
One economist with a more cautionary opinion on the effect of carbon taxation is Sylvain Charlebois, head of the Dalhousie University Agri-Food Lab. The establishment is trying to discredit him - you know, the old climate consensus strategy.
These jalukes will never break ranks because it will affect their research dollars and their professional standing. They always have a theory to explain everything, even their mistakes. And look down that list - tell me which one of those economists have ever voted anything but Liberal or NDP? I am betting they will happily try to trivialize any "conservative" opinion.
We are suspending belief because some elites have told us to. Economists - the ones sharing the same brain - are telling us that our current level of carbon taxation has a microscopic effect on inflation. Think about that - how on earth does 21 cents a liter on diesel or a carbon tax 200% the price of natural gas not affect everything that needs either one of those to be produced or transported?
As my dear departed father used to say, "I don't need to be hit in the face with a shovelful to know what shit is."
You are making baseless assertions and generalizations. There are plenty of conservative-leaning economists who openly endorse carbon taxes: https://grist.org/climate-energy/this-conservative-economist-makes-the-case-for-a-carbon-tax/
https://www.washingtonpost.com/business/2019/01/17/this-is-not-controversial-bipartisan-group-economists-calls-carbon-tax/
I am talking specifically about the names on the letter.
https://sites.google.com/view/open-letter-carbon-pricing
Tell you what - go through the Sunshine List for each one of these names, and get back to me with the median annual remuneration. I am betting it's not poverty line income, and I also bet there aren't enough of them pushing a grocery cart on a weekly basis to form a two minute line at the self checkout.
No, those economists are not making wages similar to that of poverty levels - and neither are the leading opponents of the tax, such as the Premiers, and particularly Mr. Poilievre who has been making a six-figure salary since his mid-20s!
I literally argued with 3 of those economists on Twitter back in 2012 because they were defending a disgraced Conservative policy (the 31-year Canada-China FIPA) without adequate consideration of relevant legal expertise. Your insinuation of a partisan bias is baseless.
Happy Easter Jen Matt and every lilstener/reader!
You made great points about economists/experts weighing in on the Carbon Tax (CT) and not reading the room. You are 100% correct on that note My favourite comment on 'experts' was Dr Tam saying masks didn't work, then that we could use them then that 'oh my God, get a mask or stay the heck home!!!" (I paraphrase) and let's not forget that keeping travel from the source country was 'RACIST' (imagine big booming voice for that one).
As to the rental idea, yes he is reading the room but, unfortunately, he has missed the point. If you are paying $2,000 a month for rent how are you going to save for the downpayment for then house/condo/shed? That is the issue because, keep in mind, that the landlord has bills that are going through the roof and he has to deal with the poor tenants who wreck stuff and stiff him on the rent - no offense to the good renters who are the majority but ...
Now to the CT and the effect on our economy - personal and business. My better half and I are on fixed pensions - mine was fixed 17 years ago but, thankfully, CPP has helped. I did a quick calculation on the CT and GST on the gasoline and diesel for our vehicles and the taxes on natural gas to heat the house and just those three items exceeded our rebate. Now calculate in that every single thing that you buy has been on a truck and/or train in Canada - those shippers are not swallowing the CT and GST on same but passing them on. The shop owner who is selling all the items is paying more for his heat and electricity and where does he/she recoup those costs - look in the mirror bucko!
As a side note, if a CT is such a great idea, why are only 14 countries in the world using one? That would be just 7% of countries in the world.
My point is that it is easy to look at the CT in isolation and say it is not having an impact on the individual but common sense tells me that the 'experts' are being less than honest. There has NEVER been a tax that helps people by giving them more money. Also, keep in mind that the sales job was to reduce greenhouse gas emmissions NOT to redistriute money from rich to poor. Our carbon emmissions only dropped during COVID when we were all at home or doing very littel travel.
By the by, I don't believe the excuse that if there is no carbon control program that a country will be penalized financially. If that were the case i'd be seeing a lot less stuff from China and India to name just two. Companies will buy from the lowest cost supplier no matter the carbon footprint of the source country.
Oh, hint to the listener, redistribution of wealth from the wealthy to the poor does not encourage the poor to get an education and work to find a better life. What it does is discourage people from trying to get ahead and start a business or employ folks or get an education because the money you earn will be removed and given to your poor cousin who never tried in life and ignored all his opportunities. How'd that work for the USSR or North Korea? Think I exagerate - think again. Our civil service has increased substantially with no increase in service but an increase in 'controls'. $42 million spent on the gun buy back program without actually, you know, buying any guns back and the criminals are still getting their guns with no increase hindrance from the government.
If we do not wake up to what is happening in Canada we will be a third world outfit in jig time. I'm on the back nine but Jen, your kids are young as are our grandkids and I'm not seeing a rosey picture of their future.
I believe what you wrote is pretty much what Carolyn Rogers (senior deputy governor) was saying. I have a step daughter and her two adult kids who have no desire to work. They sincerely adore the people who redistribute wealth to them; and literally laugh at folks who are paying taxes. Canadians really don’t produce much of anything anymore. We are gutting our energy sectors, when energy is really a very good thing in our cold Canadian climate.
Like you, my husband and I are on the back nine and resent the ‘socialist’ plans that the government distributes without needs assessments. Surely with all the new civil servants needs analysis can be done rather than ‘universal’ money give aways. Or we can always get some contractors to build a really expensive application.
Thanks for that Carole, truer words and all that .. I often remark that if our parents had given us everything we had ever wanted (different from need) what would we have amounted to in life? One need only look to generations of welfare recipients to see what we reap when we sow a socialist ideology. Don't get me wrong, I believe in helping those with physical and mental issues but I firmly support the notion that if you can work then find a job and if you don't then we'll find one for you in order to get assistance - clean a park, shovel snow for seniors, plant trees or whatever but you need to work to receive. Ah well, 'brighter minds' have brought us to this point ...
Argentina- here we come!
John, you write, "keep in mind that the sales job was to reduce greenhouse gas emissions NOT to redistribute money from rich to poor."
The money collected from the tax is going to go somewhere. Unless you want to fault the government for not literally flushing the money down the drain, the only alternatives are to (a) use the money to fund government programs, or (b) redistribute the money back to citizens on a fair basis. (a) is an unsustainable policy because it invests the government in programs that are funded by an unstable revenue source that is supposed to decline (the fewer emissions, the less tax revenue). (b) is the logical conclusion of all of the alternatives being worse.
"As a side note, if a CT is such a great idea, why are only 14 countries in the world using one? That would be just 7% of countries in the world."
Since when do most countries agree on just about any policy at all? There's no international comparison by which the tax is objectively a fringe policy.
Why can’t the money raised go to climate mitigation measures. We are never going to stop climate change so let’s prepare to live with it. Giving it back makes little sense and it is just another leftist redistribution of wealth. Trudeau brags that people get more back than they pay in. Where does that extra money come from?
To make it politically palatable, especially East of the Ottawa River, income redistribution was a key aspect. "You actually make money money and it's those overly ambitious businesses and rich who pay for it" is a feature, not a bug of the carbon tax. Gross.
Canada has natural gas that can produce cheap electricity. We have small nuclear plants that can produce cheap electricity. (Unfortunately, the MSM has turned this extremely efficient and safe energy producer to a scary monster). The need to have an incubator run a 24/7 to keep that baby alive in a third world country seems like a really good business case to me. This is a good way to spend climate dollars and up production and productivity in Canada.
"Why can’t the money raised go to climate mitigation measures. We are never going to stop climate change so let’s prepare to live with it."
You are engaging in begging-the-question fallacy. Carbon taxes have a proven history of working to reduce emissions, Sweden has seen steady emission decreases under three decades of the tax.
"Trudeau brags that people get more back than they pay in. Where does that extra money come from?"
*Most* people. The rich are disproportionately contributing to the tax revenue and thus providing the fiscal room to rebate most citizens more than they pay.
Meanwhile those less well off are subsidizing EVs for the better well off so I guess you are correct, the government is simply passing money around in a giant loop and employing ever more apparatchiks to keep track of it.
…and you did not address the point that if climate change is the issue and carbon taxes are supposed to make people think about alternatives why give the money back? Why is it not going to climate mitigation?
If the tax money went to climate mitigation, it would complicate budget planning because the tax revenue is *in principle supposed to decline*. The more effectively the tax works as a disincentive, the more the revenue will decline - you cannot fund and plan government mitigation programs on this basis. (Not to mention that the tax will bring in more revenue than will be imminently needed for climate mitigation.)
You could also cynically say that the rebate works as a bribe to the populace to make peace with the tax, which is merely to say that a policy can have multiple or mixed motives and still serve all those purposes. The tax systematically works to reduce emissions regardless, when applied consistently and at a high enough rate.
How about investing the money into infrastructure that actually lowers carbon use, like transit?
That is an unsustainable policy because it invests the government in programs that are funded by an unstable revenue source that is supposed to decline (the fewer the emissions, the lesser the tax revenue). Not to mention that allocating the money to government programs would politically give Poilievre more ammunition, not less, in his misrepresentation of the tax as a liability to most Canadians.
Among the problems with a carbon tax is how do you avoid it? The notion is reduce the activities of expenditures that attract tax and shift to activities that don't. Some taxes, income for example, can't avoid getting taxed but consumption taxes can be avoided to a degree by avoiding consumption. Governments routinely tax things that are assessed as 'bad' for you - e.g. alcohol, cigarettes, and, in these enlightened times, carbon emissions. Trouble is you don't have to consume cigarettes or alcohol to live - consumers can decide whether or not to pay the tax and consume the item in question. Indeed, your life may well be enhanced if you don't consume alcohol and cigarettes (albeit there will be tears in government treasuries around and about should these revenues disappear).
Unfortunately, carbon emissions cannot easily be avoided, particularly in the short term. There is not enough industrial capacity to replace with any speed all our cars, trucks, trains, ships, furnaces, and so on (I think jet engines for aircraft are beyond correction - I stand to be proved wrong). This transition will take decades - no one will, for example, replace their furnace with a heat pump until their furnace falls apart. A high efficiency furnace powered by natural gas will set one back some $6-8K. A heat pump will set you back $14-18K. For some people both options are a financial disaster - for others no worries. But most people will certainly not replace their heating 'unit' until absolutely necessary. And, on top of that, their aren't enough heat pumps available to install at current rates of furnace replacement. Ditto with cars/trucks and so forth. So, it basically means that the carbon tax is indeed a tax. You have no option and you have no real alternatives. Hence the role of regulation - we all agree the less theoretical optimal route to paradise. Eventually, regulation requiring the replacement of worn out furnaces, cars/trucks by non-emitting as the 2030s shift into the 2040s will do the trick.
It will not happen by 2030 or 2035. Industrial capacity is not to hand, nor is financial capacity of the general public to do it any faster. The tax doesn't help this situation.
The other problem is that advocates note that the application of a carbon tax will make the alternatives financially attractive. What is missed is that the alternative is far more expensive than the emitting technology. So, taxes make the $14-18K heat pump cheaper than than the natural gas furnace at $6-8K plus the $10K carbon emitting tax to operate it. Yay. Something that cost far less in the good old days now costs far more - standard of living falls. That is, money that would have been employed in sending one's family to Mexico to avoid 10-days worth of winter, won't happen because the cash has gone in the support of one's home heating. The priority is obvious. The absence of a nice beach in February is sad but, good news, you won't be contributing the GHG emissions associated with the flight to the aforementioned Mexican beach.
I lean toward regulation notwithstanding its economic inefficiencies. I simply think it is doable and avoids multiple years of paying a tax you cannot meaningfully avoid.
Your argument wholly ignores the economic effects of the rebates. If you have truly reduced your consumption of CO2-emitting goods to the bare minimum, then congratulations: you are definitely one of the citizens receiving more income from the rebates than you are paying through the tax.
The tax of course takes away money from certain sectors of the economy, but the rebate of course moves the money to other parts of the economy. The Conservatives are pretending that the carbon tax revenue simply disappears from the economy, which is at odds with everything we know about economics.
"everything we know about economics"
Which "we" are you referring to??? This group - "if you have truly reduced your consumption of CO2-emitting goods to the bare minimum", or the group that doesn't need iron supplements or red blood cell transfusions?
The Liberals have no idea how correct their own compete screw ups, so their fix for virtually everything is to meddle in other jurisdictions and offer cash - then of course crow like a child who as accomplished something, like tying their shoe laces for the first time! They simply need to be gone for the future Unity of the country because they are regionally divisive and lack any national vision!
Changing our economy starts with changing the business culture in Canada and that starts on Bay St.
My day job is owning and growing a becoming quite consequential capital intensive business in Canada. It's not oil and gas or home building, so I guess that is strike one for me in Calgary. I'm not speaking out of school when I say this, Jen knows who I really am, and Ken Schultz I suspect has figured it out.
Our absolutely biggest issue in Canada in business is the lack of capital for growth business. There is capital for value investment, businesses with "big moats" built by Ottawa, for land and real estate. It's dead easy to get financing for farm land for instance, even today, but for growth, lol, I've never even been to Bay St to raise money. City of London, Dallas and Wall St. indeed. Even Abu Dhabi, but not Canada.
Why? Because Canadian finance and ultimately our 0.1% asset rich established class doesn't believe in us. I know them, many if not most have assets outside Canada and even a second passport. They just refuse to invest in Canadian growth business, and without the fuel of investment you can't grow and can't invest in productivity. I've been asked to move my business to the US quote "to make it more attractive to capital." I shouldn't have to do that.
We have an ambition problem in Canada, but that comes from the very top down, and I don't see that changing. That's why I highly suspect the feds want so much wealthy immigration, to bring in people who actually want to build something and aren't shy about wanting to be rich.
It's why I'm so hard on our elites in Canada, they suck as elites, they aren't good leaders, and they are quite frankly risk adverse and lazy. I say this with first hand experience. They would rather take a 7% return than go for that potential 10x ten bagger. Anthony Lavacera wrote about it if you are interested.
Ultimately Canada is lead by technocrats instead of wannabe plutocrats and it shows.
I can’t argue with what you are saying. At some point, profit became a bad word in Canada. All big companies that make a profit are ’bad’. Even small companies that make a profit are bad. Politicians who should be promoting entrepreneurs almost universally condemn people making money as ‘profiting off the backs of’ and here you have to pick who businessmen are profiting off of, as it appears every business in Canada is making money while screwing someone else.
I believe that there are still people in Canada who have ambition, but they have little help from anyone. In Washington State (maybe this has changed now) you can get a business license in about 10 business days. It can take months in Canada, and that is just reading all the by-laws. Okay, but talk about over-regulated.
Talented people have a far better chance of getting ahead in other countries than in Canada. There is some kind of bias against ambition and entrepreneurship. It is sad and frustrating. The pathetic story is that the elites just don’t care. Bankers will only give you money for startups if you have money of assets that can be quickly liquidated or you know ‘someone’.
There may be an answer, but I don’t know what it is.
The answer for those who want to stay in Canada, move to Alberta. The "Texas North" thing is only repeated by those who have never actually lived in Alberta but it's most definitely the most "America like" when it comes to culture, business, ambition and entrepreneurship. 2nd place isn't even close to Alberta. Calgary is a city where it is okay to say "I want to be successful." Why? I don't know, but being a business person is socially acceptable in Calgary. Alberta is also set up for entrepreneurs from the legal framework to the ancillary services available. All it lacks is US levels of access to capital, and the old timers are right, Bay St sucks for growth businesses.
I truly think that with available and plentiful capital everything else can be managed or worked around, include the "loser" culture in many parts.
Want to grow productivity in Canada? The absolutely first thing to do is blow up every single protection our finance industry enjoys. Get rid of all of it. Allow all players in to provide all services, including fintech.
Our "stable" banking system is killing the country literally.
I live in Alberta and there is no place in Canada like it. Alberta has some common sense (so does Saskatchewan). I was reading something a while ago that said that if you want money, make some comments about ‘climate disaster’ and how whatever your business fixes, it will do something that will help to save the planet and/or how you will be a DEI employer.
This, they wrote was the fastest way to get grants or loans. Once you get the money, they won’t check up on you. These ‘lenders’ have to tick boxes when they give out money.
I don’t know if it is true, but it sounds like it might be. Back in the dark ages when I was stating businesses in Alberta, I went to the bank with a marginally good business case and a bit of my own money. That was all that was needed.
Good luck in your endeavours.
That certainly isn't the case anymore. I'm envious. Now you have to go to the private equity market, and they want more than Prime + 3.
The defence of the carbon tax based on people getting as much, or more, money back than they pay is utter malarkey and it passeth human understanding that any sentient being can be sufficiently credulous so as not to dismiss it as such in a nanosecond.
Let us review some very basic facts:
1. Energy feeds into EVERY aspect of what makes modern society work.
2. Cheap and plentiful energy facilitates technological advance and supports a high standard of living.
3. Deliberately making energy more expensive causes a decline in standard of living by making everything more costly.
4. Deliberately degrading people's standard of living tends to make them grumpy.
5. Grumpy people in the voting booth tend to toss sitting governments into the trash bin.
Definition: Climatard - a person who actually believes they can change the climate by paying a tax to a government. Seriously, what kind of buffoon could actually believe that paying a carbon tax to a government that gifted us the ArriveScam fiasco, the passport boondoggle, and couldn't run a lemonade stand, to be a value-add proposition in a world where even if Canadian carbon emissions went to zero it would not move the temperature needle? The whole business is beyond preposterous.
So why then does the carbon tax exist? Simple - to allow our virtue-signalling Prime Minister and his minions to puff up their chests, declare they are helping to save the planet, and preen and prance about as virtuous do-gooders on the world stage.
I certainly do not believe the carbon tax is to be a major component of inflation, but it is a contributor, and given the foregoing, it is an utterly unnecessary and self-inflicted one.
As to the carbon-tax boosting letter from the economists, well, what can I say beyond that not for nothing is economics called the "dismal science". These are the same clowns who have predicted 10 of the last 3 recessions, were taken by surprise by the 2007-08 financial crisis, dismissed recent inflation as temporary, have no problem with profligate government spending and bloating of the public sector, came up with "modern monetary theory", and on it goes. Look to just about any NGO or advocacy group and you will find economists on staff who support that group's position - basically by cherry-picking data, ingnoring many aspects of the real world, and "torturing data until it confesses". As for these carbon-tax cheerleaders, as Jen notes by sticking their head above the parapet they have made themselves a legitimate political target, in no small part by coming to the defence of a government that has so fouled up management of the economy that anyone supporting them is likely to be labelled as a bloviating incompetent by mere association. Pollievre surely recognizes this and will fully exploit it - and good for him for doing so.
Actually, "virtue-signalling" is a good thing in the context of preventing global warming. It is precisely when one country takes a lead on cutting CO2 emissions that it has the credibility to lecture and nudge other countries into taking their fair share of action on a *collective-action problem*.
Like that of many other critics, your analysis is predicated on pretending that the rebate money funded by the tax does not exist and that the tax revenue mysteriously disappears from the economy with nothing to show of it.
We should be skeptical of anyone who generalizes about the economists on their letter and yet who will not even speak just 1 of the economists' names. That is a poor way to show expertise about the self-proclaimed experts.
"coming to the defence of a government that has so fouled up management of the economy that anyone supporting them is likely to be labelled as a bloviating incompetent by mere association"
Except that criticizing a policy stance by an opposition party is not tantamount to a blanket partisan endorsement of a sitting government's platform - period.
Sigh ….. where to begin…..
Virtue signalling is a “good thing”, enabling Canada to “lecture and nudge” other countries? How is that working out with China and India where coal-fired power plants are popping up at breakneck speed? https://www.reuters.com/business/energy/cop26-aims-banish-coal-asia-is-building-hundreds-power-plants-burn-it-2021-10-29/. Do you seriously believe that any country, least of all China, or India (where our dear leader made an ass of himself on a visit several years back) is going to adjust its policy because of Canadian virtue-signalling, particularly when the lead virtue signaller is Justin Trudeau, now pretty much a global laughing stock?
As to your second comment, I did not say that the tax revenue mysteriously disappears with nothing to show for it. I am sure a portion of it, for example, went into paying for the ArriveScam app, and some perhaps went to paying for the chairs purchased by the federal government for those poor souls in Montreal waiting days in lineups to get passports. https://www.politico.com/news/2022/07/04/have-a-seat-canada-looks-to-ease-passport-lineup-crisis-with-801-new-chairs-00043927.
As to not speaking any of the economists’ names – OK, since you deem that of some value, let’s do so. How about Stewart Elgie, University of Ottawa, who is the “Jarislowsky Chair in Clean Economy”. Gee, I wonder where his research funding comes from, and on what it is predicated. Or Tom Green, Senior Climate Policy Advisor of the David Suzuki Foundation – now there’s an objective organization. Looking at the broader list, nearly every single one resides in Academia. I wonder how signing on to a letter supporting the carbon tax might possibly affect their research funding.
I did not say the economists’ letter was tantamount to blanket partisan endorsement of the Liberal government’s platform in totality – no economist would be so stupid as to do so, particularly given the unwavering incompetence of this government.
"Do you seriously believe that any country, least of all China, or India (where our dear leader made an ass of himself on a visit several years back) is going to adjust its policy because of Canadian virtue-signalling, particularly when the lead virtue signaller is Justin Trudeau, now pretty much a global laughing stock?"
Having a carbon tax doesn't overnight make other countries look up to Canada, no. But while different countries have different levels of responsiveness to global perceptions, every country around the world is paying at least some attention to what some of its friends are doing. When one countries lead, other countries will follow, and when multiple countries lead, many other countries will follow. The current weak link in the chain of inspiration is however the Conservatives, who want us as a country to ignore the obvious precedent set by the likes of Sweden and Norway.
"I am sure a portion of it, for example, went into paying for the ArriveScam app, and some perhaps went to paying for the chairs purchased by the federal government for those poor souls in Montreal waiting days in lineups to get passports."
It is the case that less than 100% of the carbon tax revenue is being returned in rebates, but I am not aware of any reporting confirming that any of the carbon tax revenue is going into the budget. Do you know of a specific report to the contrary?
"Looking at the broader list, nearly every single one resides in Academia. I wonder how signing on to a letter supporting the carbon tax might possibly affect their research funding."
Academia doesn't work the way that you are hinting. Academics from all subjects criticize all governments all of the time and are safe to do so, because the process through which money flows from government to specific academics is mediated by a long lineup of actors each accountable to various different authorities and constituencies. There is no chance that a single open letter determines the level of funding to a specific university, and people who most closely control an academic's access to funding are themselves quite distant in accountability to government.
I interacted via Twitter with several of the economists on the list over a decade ago, I can personally testify that they supported carbon taxes when there was a Conservative government in charge, and that they defended a Conservative policy (the 31-year Canada-China FIPA) despite my personal criticism of them. Though not on the open letter, Sean Speer is a notable policy advisor who was appointed by Stephen Harper yet who publicly advocates for carbon taxes.
Sigh again ....... I concede that some around the world are paying attention to what Canada is doing, but only with a mix of pity, contempt, ridicule, and incredulity. I have plenty of international contacts and I can assure you not a single one of them are looking at Canada as any kind of "leader".
As to what is happening with federal budgets and tax revenue, just read any one of the Auditor General's annual reports for the last 10 years. No need to read them all - just one will do - the same fiscal malfeasance repeats itself year in and year out.
As to not following Sweden's example? Well, I sure wish we had parroted their response to COVID, when Sweden was perhaps the ONLY country in the world that followed the pandemic script that had been developed before COVID arrived and everyone set their hair on fire. In any case, as you surely know, Sweden (and Norway) are blessed with hydroelectric power, and they are happy to use nuclear too (which I see as the real solution, not solar power and windmills). Further, I am unaware of Sweden being particularly blessed with hydrocarbon resources. As to Norway, much of their large oil and gas sector is state owned, so it is all well and good to virtue signal with a carbon tax when it hardly makes a dent on the oil and gas export revenues going directly into government coffers. I am amazed that anyone would cite Norway as a carbon tax success story.....
As to Academia not working "the way that you are hinting", sorry, yes it does. In Academia, follow the money......and if you do not belief that ideological capture is not a problem in academia, you are wilfully blind. Further, I tend to put more stock into the musings of academics when they face significant consequences for being wrong.
In the Liberal world, you only get a government grant if you are aligned with climate alarm. So, anyone wanting grant money has to tow the line. Some of them probably believe what they are saying, but it is a follow the money game – I get money if I create climate alarm by saying the sky is falling. I get no money if I say that the climate appears to be warming because the winters are getting warmer, so on average, it looks like we are getting warmer, rather than having milder winters. Shell game at best.
"I concede that some around the world are paying attention to what Canada is doing, but only with a mix of pity, contempt, ridicule, and incredulity. I have plenty of international contacts and I can assure you not a single one of them are looking at Canada as any kind of "leader"."
Red herring. We are not debating what the current status of Canada's reputation is (or your non-objective assessment thereof), but what hypothetical leadership would look like and how it would inevitably require climate leadership that is made easier by the tax.
"As to what is happening with federal budgets and tax revenue, just read any one of the Auditor General's annual reports for the last 10 years. No need to read them all - just one will do - the same fiscal malfeasance repeats itself year in and year out."
Red herring. Reports faulting the transparency of federal budgets are not tantamount of evidence that any of the carbon tax revenue is specifically going into general programs.
"Well, I sure wish we had parroted their response to COVID, when Sweden was perhaps the ONLY country in the world that followed the pandemic script that had been developed before COVID arrived and everyone set their hair on fire."
Red herring.
"As to Norway, much of their large oil and gas sector is state owned, so it is all well and good to virtue signal with a carbon tax when it hardly makes a dent on the oil and gas export revenues going directly into government coffers. I am amazed that anyone would cite Norway as a carbon tax success story....."
The carbon tax is supposed to affect domestic emissions, not necessarily foreign emissions. But if every country adopted Norway's carbon tax regime, Norway's fuel exports would decrease (or become less GHG-intensive through innovation). Your point is another red herring.
"As to Academia not working "the way that you are hinting", sorry, yes it does. In Academia, follow the money......and if you do not belief that ideological capture is not a problem in academia, you are wilfully blind."
You are just throwing out an insult at a broad profession with nothing to show for it beyond your own undemonstrated self-claimed authority on the matter. And we were not discussing "ideological capture", we were discussing the tying of government money to academic advocacy of a very specific policy, something that you cannot prove.
The renters bill of rights is (as I understand it) is a copy paste from similar laws in the US. As mentioned in the podcast, inherent in the US renter rights initiatives is an epidemic of squatters. This is a nightmare. Homeless encampments, opioid crisis, productivity collapse, and now coming soon, NY State squatter style crisis! JT must have taken the RCMP safety report as a challenge and not as a warning. I expect purge sirens by the end of this PM’s term.
It is clear to me that whether you think Trudeau is on the right side of the debate or Polievre is on the right side of the debate. Living in Canada is way more expensive than it was five 10 years ago. I believe it's the government's responsibility to do everything they can to mitigate this issue. If that means eliminating the carbon tax so that our economy becomes more vibrant and that we start seeing a lessening of living costs, then do it.
On Matt's point about Liberals being unable to sell income redistribution, it's worth remembering that in the 2015 campaign they did sell a redistributive income tax scheme as a major platform plank.
The main promise was to raise the federal rate on taxable incomes over $200k from 29% to 33%, while reducing the rate on taxable incomes from $44.7k to $89.4k from 22% to 20.5%. Pure redistribution (or it would be if the tax hike were big enough to pay for the tax reduction, which it wasn't at all, but that's not my point here).
Many wonks pointed out at the time that the biggest beneficiaries, people earning around $89k-$200k in taxable income, more in gross income, were decidedly upper middle class, and that low to middle income people benefitted not at all. Ya, said the Liberals, but these people are hard done by. Try to live on a schoolteacher's salary.
Fast forward to the carbon tax, and now the upper middle class are the people who have to pay more than they get back, to fund net wins on "rebates" for (by StatsCan reckoning) 94% of people earning under $50k. The very same salt of the earth mid-career schoolteachers who were the deserving middle class in the 2015 Liberal platform are now the idle rich who should be grateful to pay more than they get in the carbon tax scheme.
One can perhaps defend either of these plans depending on one's priorities. But Liberal definitions of the evil rich and the deserving middle class are decidedly circumstantial.
As someone who will be voting Conservative in the next election, I do find the whole debate about the carbon tax rather amusing. I have always thought that if we decide as a country that carbon emissions need to be reduced, then a market-based mechanism like the carbon tax is the most efficient way to do it as compared to the alternatives (though why, as Jen points out, the Liberals contrinue at the same time to pursue those less efficient alternative -- such as EV subsidization -- while also introducing a carbon tax is a mystery to me, but such is the schizophrenic nature of Canadian politics). There are many, many reasons to criticize the Liberal government, which I don't need to canvass ad nauseum here, but suffice to say that under their watch we have seen a massive drop in the productivity of the country and a precipitous decline in foreign investment, all while they have pursued class-based wedge issues for political gain and have embraced identity poliitics (and performative politics) full scale. We have also seen them introducing more and more expensive social programs in the face of increasing budgetary deficits, all while existing social programs (healthcare among them) faulter and decline. It is ironic to me that one of their policies that I find the least offensive (the carbon tax) may be their undoing. But then, we saw this back in 1993 when the Torys were tossed for replacing an inefficient tax on manufacturing with a broad-based and much less distortionary value-added tax, so perhaps what goes around comes around.
If the Conservatives win a majority in the next election, I believe they will eliminate the carbon tax on the retail side (how could they not, given their current positioning on the issue) but I also believe they will keep the carbon tax on the industrial side -- recall, that the Liberals have enterred into multiple agreementts with industry participants to guarantee carbon pricing so it would cost the Torys a fortune to break those contracts. All of this means of course that Canadians will continue to pay the carbon tax, except that it will be hidden.
I’ve learned over the years to be very cynical about the musings of economists who in my humble opinion frequently propose academic theories and lure politicians into applying them to action through the use of policy. Frequently the results in the real world don’t necessarily match up to the theory leaving those used to prove the theory to suffer the consequences.
In my line of work economists have a very poor track record for helping businesses make good financial decisions to position themselves from the short to medium term. This isn’t the disparaging comment that it might seem to be either. Why? Because “stuff” happens that is entirely unpredictable but turns markets upside down.
How many economists sized up the pent up consumer demand in the declining days of the pandemic and predicted hot house inflation and high interest rates? Many were more concerned about deflation, but that is a serious “miss” that might have helped shape Government spending decisions that would help limit loose money in the market place.
Economists are imperfect like all other professions. I myself argued on Twitter in 2012 with 3 of the economists named in the open letter because they were defending a disgraced Conservative policy (the 31-year Canada-China FIPA) without adequate consideration of relevant legal expertise: https://unpublished.ca/opinion/how-the-canada-china-fipa-will-secretly-disrupt-canadian-democracy-and-gouge-public-money
But there have been many examples through history of politicians ignoring the advice of economists and suffering consequences accordingly. For example, economists were early opponents of slavery, an institution great for slave-holders but awful for maximizing potential societal wealth. As a layperson, all you can really do is look at debates on a case-by-case basis and try to independently judge if the proclaimed experts actually are studied on the policy debate in question or studied from a position without short-term stakes in the matter.
The problem with the carbon tax is 2-fold. I’m not against it in principle but these issues have to be acknowledged and addressed.
The first problem is that there are no reasonable alternatives for the vast majority of Canadians. A few examples. Transit is abysmal in this country. Very few people have 20k lying around for a heat pump. Electric vehicles are double the cost of combustion engine vehicles and the infrastructure needed for their use doesn’t exist at the necessary scale. There is no chemistry alternative to the Haber reaction (needed for nitrogen based fertilizer and the only reason the planet has this many humans) than to use petroleum. Rail in this country isn’t large enough to replace trucks. In other words, people just have to absorb the costs because they can’t reduce their use because there is no meaningful way to do it.
The second problem is the rebate. Right now, it serves as a wealth redistribution scheme. Based on the calculation, it punishes families because their total footprint is bigger (larger home, larger vehicles to move the kids) compared to single individuals even if the single individual has a larger footprint per person. We are supposed to helping the environment, not transferring more money than taxes to individuals. The rebate also prevents investment into things that will help, such as transit, that would actually allow people to reduce their footprint.
The tax should only apply to urban voters, the money should go into transit for urban voters, governments have to improve their game with infrastructure (no more BS like the Eglington line or the Ottawa LRT in terms of quality and time for construction) and as new infrastructure comes on line, the tax goes up accordingly to change behaviour.
EV’s have no trade in value and insuring them is pretty costly. Hell buying them is pretty costly. Car manufacturers are no longer manufacturing them. I guess there is no longer a business case – hopefully we can sell those batteries that we have spent billions to make.
Transit is not only abysmal; it is very scary and not well policed in the larger Canadian cities. Small cities can’t afford a brilliant transit system. Too few people.
Heat pumps are expensive and generally don’t work after -20. Alberta, January 12, 2024 – 38 all-time cold records were broken – all about -40
It seems to me we should have adult conversations about the carbon tax and climate change.
"Based on the calculation, it punishes families because their total footprint is bigger (larger home, larger vehicles to move the kids) compared to single individuals even if the single individual has a larger footprint per person."
Where is your information on that claim coming from?
"The rebate also prevents investment into things that will help, such as transit, that would actually allow people to reduce their footprint."
That's a dubious claim. Governments are left with as much money after the tax as without the tax, so the tax-rebate scheme certainly does not prevent governments from making any particular infrastructure investments.
"The tax should only apply to urban voters, the money should go into transit for urban voters"
That would create arbitrary incentives in the tax, if blanket rural exceptions are even possible to enforce. How would you tax the supply chains in such a way as to make that happen, other than exempting gas stations in the countryside? In that case, you would create the arbitrary incentive for urban-dwellers to in some cases simply travel to the countryside to fuel up. The tax needs to be applied on a consistent basis to all emissions if it is going to be very effective.
The basis for the rebate is in the globe and mail. For example, it calculates the rebate based the “average” living space, so condos are highly favoured over houses. Therefore, a family of 5 in a 2000 sq bungalow gets less back than a single individual in a 750 sq foot condo.
In addition, you have to cut rural areas slack because options to lower carbon is less cost effective there compared to urban areas.
I cannot find the Globe report to which you are referring. I found this on one Globe commentary: "The tax is paid based on how much carbon you consume, but rebates are based on family size." https://www.theglobeandmail.com/business/commentary/article-we-have-met-the-enemy-of-the-carbon-tax-and-it-is-us/ If the rebate is based on property size, something traditionally taxed by municipalities, then I am surprised because most of the critics of the tax I have come across have never cited this obvious would-be oversight.
The problem comes back to the fact that the Liberals were hoping to buy votes with the program while trying to say they were addressing climate change. Good policy doesn’t try to do both. The fact is, why have a rebate at all? Either we need to change or we don’t. The policy does nothing to drive change because there is no investment in making change.
Here’s another example of shitty policy. High frequency rail. Cutting 15 minutes off of a journey isn’t going to get anyone of short haul flight routes. The latest plan includes Quebec City, which is NOT in the major corridor, but excludes Ottawa which has 4x the population and is in the major corridor. Why? Have to get those Quebec votes, damn effective policy. This is the problem. The good of country is always secondary with this government.
We don’t have the national fiscal capital to screw around. Money is tight and every dollar needs to be used as effectively as possible.
Economists were recommending that the tax scheme be revenue-neutral before the Liberals ever adopted the idea.
The money collected from the tax is going to go somewhere. Unless you want to fault the government for not literally flushing the money down the drain, the only alternatives are to (1) use the money to fund government programs, or (2) redistribute the money back to citizens on a fair basis. (1) is an unsustainable policy because it invests the government in programs that are funded by an unstable revenue source that is supposed to decline (the fewer the emissions, the lesser the tax revenue). (2) is the logical conclusion of all of the alternatives being worse. (Not to mention that (1) as a policy would have only emboldened Poilievre's rhetoric against the tax even more than it already is.)
Agree with what you are saying to an extent but let’s forget rhetoric for a sec. An honest question is what can the average Canadian do to reduce their carbon footprint and thus reduce their carbon tax? Very little. The infrastructure doesn’t exist. Farming and shipping of goods are what they are. Given this, how is the tax going to result in meaningful change?
Trudeau saying if we get rid of the tax people will lose their rebates is the equivalent of Dorothy pulling the curtain back on the wizard. He is telling you that it is a wealth distribution scheme and he is trying to buy your vote. He would never make this argument otherwise.
As always, I really enjoyed the podcast. I wanted to make some observations about the carbon tax and why I think that it is both bad policy and bad politics. The point of the tax is to create an economic incentive to change behaviour. The tax can be avoided or its impact lessened if it leads to people using energy sources other than fossil fuels. Drive less, turn down the heat (or the air conditioning up) or buy vehicles or home comfort sources that are powered by electricity. This is where the policy breaks down. Alternatives are either not readily available or the savings realized will take too long to the consumer back. Let me give a personal example. I heat my home with natural gas. My home is larger than the average Toronto home, but because I have a high efficiency furnace, I use only slightly more gas than the average home. The carbon tax I pay is more than the cost of gas to heat my home. That’s right, the tax is more than 100%. So, should I buy a heat pump? An environmental organization’s web tool tells me that the cost of heating my home would be 9% more with a heat pump than heating with gas. Even if this is left aside, a heat pump will cost me about $20,000. If I did this, I would save the cost of the tax. If we assume that the cost of the tax is $1000 per year (reality is it is about $600 to $700) that is a 20 year payback assuming the heat pump lasts that long and I would be paying more to heat my home. Enough of the policy argument, now for the politics. The tax is a pay now, get your money back later program. If you are living pay cheque to pay cheque, this is an unacceptable burden. What I find somewhat irksome about this conversation is that the rebate is a return of tax, plus a small amount more, for a tax that has already been paid. It is not a grant. For many people a rebate does not work. The money to pay the tax is needed when one pays for their gas at the pump or pays their heating bill. These same people will also find it difficult to purchase a heat pump or an EV. Having just returned from Nanaimo where I visited my son, I saw how first hand what a struggle it is for people who make $25 to $35 an hour to make their way in a small city. We need policy that addresses climate matters. The carbon tax is not the right way to do this. Tax heavy emitters and provide relief to consumers for the costs that are passed on might be a better way. In any event, thanks for the podcast.
The market already provides services that are essentially free and allow to count your rent payments towards your credit score (Chexy is one example).
So the government trying to do that is them being behind innovators by a few years. More money wasted on some useless bureaucracy.