Kyoto a breeze (part 2) - tax cuts and oil price increases?

“show me the money”

There are many good GPC blog questions being raised and debate is very healthy. We need to focus on real solutions and how we can use tax revenues for our future.

Let's keep in mind that oil prices will continue to rise even without a small carbon tax. This will drive up the cost of goods, the cost of fuel for transportation, electricity, and heat for our homes and businesses. In relative terms, the percentage of the carbon tax will decrease as oil prices increase.

Which taxes to cut or cutting taxes may not even be the right way to reduce the long-term cost risk to the economy. The wealthy can pay more and should be willing to invest in their children's future. The non-working and working poor need to be taxed lighter and get more support to offset the carbon tax and the future rise in fossil fuel costs. They need to provide for their children day to day and for the future.

So we need tax revenue more than tax cuts.

How we use the tax revenue holds the potential solution to savings for all Canadian taxpayers and businesses, and our economy. We need to avoid the future cost of fossil fuel. We need to reduce emissions and mitigate the cost of climate change. We need to invest in solutions and we need to start today.

Last year Harper cut the GST by 1%. This was a $5 Billion loss in tax revenues. I see this as negligent management. GST is not a cost for business, so they saved nothing. They collect the GST and get an input tax credit on the GST they pay, so it is not a cost to them. The cost is ended by charging the final consumer who gets no rebate. Lower income earners get a small partial GST rebate.

That means the poor got less savings from reducing the GST. The richer earners who do not qualify for the existing GST rebate saved the whole 1%. Also, the poor buy a bigger portion of untaxed essentials than the rich. The rich buy more expensive homes, cars, spend more on higher priced clothes, travel, entertainment and many luxury items the poor have no money for.

This means the 1% cut to the GST saved the rich, not the poor. The government now has less money to spend on those in need and to fight climate change - tax cuts in this case are bad. If your family spends $20,000 per year on GST taxable goods and services, the most you would save is $200. If your family spends $70,000 per year on GST taxable goods and services, you would save $700 per year. Who wins here?

WE need to reinvent the way we market tax effects, so people can see a better way. Canadians have been polled and the majority, say they are willing to pay more to fight climate change. The best option is to be sure they understand the true cost of tax deductions and how the tax we pay can save us from further cost increases if we continue our reliance on fossil fuels. We need a Climate Change Fund

Paying a carbon tax will shift the demand and bring on alternatives that will not increase in price and will limit climate change costs. This is a very easy concept to understand. Government revenues can be used to support the change.

Last years $5 Billion in GST cuts, about $2.5 Billion in personal tax cuts and incentives, about $2.5 billion in corporate tax cuts and incentives all totaled to about $10 Billion. This $10 Billion per year, over two years, is the $20 Billion Harper said his budget promised. This year, Harper's budget will give more tax cuts and the new yearly total of Harper cuts is likely around $15 Billion plus. Harper is bad. ( say this in South Park style) Tax cuts are bad. Fossil fuel is bad.

Let's imagine we take $10 billion (of the $15 Billion)per year of those latest tax cuts and accumulate them for 10 years - WE now see the government could have $100 Billion to spend over the next ten years. Canadians will understand the concept of putting this in as a new tax for climate change fund. This is a small price to pay and the investment will save us money in other ways very quickly. This is over top of the carbon tax shift which also will save us over the long-term and is currently billed as revenue neutral.

Let's imagine we took all the surpluses since 1999 and last years and this years (last two years alone was $25 Billion and the prior years back to 1999 were $75 Billion) (Department of Finance figures) - a total of $100 Billion!! Supposing the trend continues and if we go for change the benefits of a huge business opportunity creates many jobs, for the future. We should plan an additional $100 Billion of surpluses over 10 years to invest in solutions. Rather than wait for a solution or give back taxes or pay on the debt we could budget an additional $10 billion each year for the Climate Change Fund. Or call it a Rehabilitation fund to rid us of our addiction to fossil fuel and the future price shocks.

Our EI Fund has a surplus of $56 Billion. With more of us working to install energy saving processes and alternative energy equipment, this will grow the fund. If we continue to grow it, the Government could use $50 Billion of the fund over the next ten years as a one time transfer for solutions, into the climate change fund at some point.

The CPP Investment Fund is over $100 Billion and they invest it in guaranteed investments and capital securities. The fund is expected to grow to $250 Billion over 10 years. Let's imagine the government borrowed ( a loan) from our own CPP Fund and paid interest which is a pretty safe CPP Fund investment. Suppose $50 Billion could be invested in solutions now, rather than wait. It could jump-start the climate change fund and the savings could pay it back.

Now we have the Carbon Tax $40 Billion per year and over 10 years that means at least $400 Billion (If we reduce fossil fuel use or taxable CO2 production, then the tax rate could increase to speed up a good thing).

Lets look at the possibility of a Climate Change Fund not tax cuts??? Over 10 years if we pay the same level of taxes we did in 2005/6look at the money and we can invest it to save us all much more over the long-term.

Previous yearly tax cuts ( new climate tax ) $100 Billion
Average surpluses or Climate fund budget (over 10 years) $100 Billion
EI Fund surplus (one time transfer) $ 50 Billion
CPP Fund -Loan to Canada to setup Climate Fund (one time) $ 50 Billion
The Carbon tax $400 Billion
______________

Total climate change fund over 10 years $700 Billion

So this amounts to $70 billion per year for each of the next 10 years. Now we’re talking about the power to change the world (or our Canadian share of it). In doing so, we will save the Canadian taxpayer the sorrow of the price of fossil fuel tomorrow.

But you say we did not pay surpluses on the debt? The true debt, is the cost of inaction and the future generations will pay dearly. So why not leave the debt. However, I say we can pay the debt another way, if government invests the Climate Change Fund on cost saving solutions and even some on revenue generating solutions, all of which reduce our emissions.

If we invest $70 billion per year into alternative energy, efficiency, emission capture and mass-transit solutions, etc., all our costs will go down and so will emissions and health costs. All the Baby Boomers might get a few more years to party. Their grandchildren might have a world left to live in. We will also shift to alternative energy and thus avoid billions of dollars in the increased cost of fossil fuel by not using it to the point of desperation.

Government can save on all its costs for energy too, on every building and every vehicle they pay to operate. Imagine every government building producing at least 30 – 50% of its own energy in 10 years. The savings can be used support those in need and build a new kind of surplus to pay on the debt and eventually lower taxes. This is the concept of investing.

Business will be more profitable and generate more tax revenue.

With this kind of Climate Change Fund, government could increase all federal subsidies to buy alternative energy equipment. This will stimulate a quicker change. As government, business and consumers begin to buy alternative energy technologies, it will all advance. As technology advances, and developer competition for market share heats up, prices will decrease gradually, but only when we all begin to buy and economies of scale materialize. We did it for computers and cell phones so why not solar, micro wind turbines, geo thermal and fuel cells?

If Government, business and consumers begin to install alternative energy equipment in phases, we can meet emission reduction and over 10 years, I truly think, it will cost us less than not changing. Over the long-term it will cost us much less.

Large scale initiatives to generate electricity for the grid from alternative energy can move forward at a much quicker pace. Government could invest or jointly own or provide much heavier subsidies for the nest 10 years for industrial size zero emission power production. If government actually assumed some ownership they could generate ongoing revenues. Pay the debt with these. This along with the energy capacity distributed on each public building that saves the related power costs and reduces emissions.

This is investing and Canadians can grasp the concept. We need to pay a small bit more in taxes in the short-term to save money in the long-term. We need a government that understands the economics of change. WE need socially responsible business leaders, policy makers and taxpayers all working in unison. We only have one planet and we are talking about our children’s future. We need to live in harmony with nature so the Earth can replenish herself. All cultures preach this message including the book of Genesis. Why do we continue to reap the wrong rewards?

Stephen Harper has no long-term vision. He has no concept of the challenge. He is not worthy of leading a horse to a polluted water hole in the tarsands of Alberta, and he is most certainly not fit to lead Canada or any nation on this planet!

To quote our GPC Leader, Elizabeth May, “It’s time to change the climate in Parliament.”

My stance here is that we can raise the money, and it would not cost us more and in fact it will save us all money in the mid to long-term.

Kyoto, a breeze! Think first, comment, debate, analyze and ask questions. We still technically live in a democracy where freedom of speech, thought and expression are our rights. Harper lives in his own distorted bubble, just ask Bill Casey, my area MP.

I hope to post “Kyoto a breeze (Part 3) “ to my blog sooner than this part two delay. I will delve into some detail on how it could be possible to address the specific sources of emissions and the related costs( one part at a time). We should have a net profit after investing the $700 Billion over 10 years, not to mention keeping our energy costs from rising. 800 MT of CO2 down to 563 ( 6% of 1990 levels by 2012) and then we start to kick emission butt.

That’s my story and I’m sticking to it.