Carbon Conundrum by Elizabeth May

No one likes the idea of a new tax. The Beatles turned citizen angst into their song Taxman — “If you drive a car they’ll tax the street, if you try to walk, they’ll tax your feet.” The tax averse instinct runs strong. No wonder politicians, in general, stay away from the “T” word, unless they are calling for tax cuts. I am baffled the leaders of other political parties are so afraid of the word that they won’t advocate the most sensible approach to fighting climate change — even when a new tax is entirely offset with new tax cuts. The Green Party is advocating a tax shift — significant cuts in income taxes, enhanced income supports for low income Canadians and seniors, and cuts in both employer and employee contributions to CPP and EI, all covered through the application of a $50/tonne carbon tax. Economists and experts agree that a carbon tax is the single most effective way to deliver a consistent signal to the economy. Among those who support a carbon tax are Don Drummond, chief economist at TD Bank, who explained, “Pollution must have a price tag. Currently it is too cheap to pollute, and too expensive not to.” In response to the Green Party’s call for tax shifting, Environment Minister John Baird denounced the idea. Ignoring the fact we were calling for a revenue neutral proposition of reducing taxes on things we say we want (income and jobs) and shifting them to things we say we do not want (pollution and greenhouse gases) Baird attacked the idea as “the mother of all taxes.” The Harper government avoids facing the facts about the enormous economic damage threatened by climate chaos through wild exaggeration of the economic impact of acting to address the threat. The former head of the U.S. Federal Reserve, Paul Volcker, noted “(The argument that taxes on oil or carbon emissions would ruin an economy is) fundamentally false. First of all, I don’t think it is going to have that much of an impact on the economy overall. Second of all, if you don’t do it, you can be sure that the economy will go down the drain in the next 30 years.” This is consistent with the view of the former senior economist at the World Bank, British economist Sir Nicholas Stern, whose detailed analysis of the economic cost of failing to reduce greenhouse gases (GHG) quite rapidly, came to a staggering $7 trillion globally — the equivalent of an economic hit larger than the Depression and two World Wars. The argument for a carbon tax is clear. We need to have consistent, coherent pricing signals. Consumers and industries will react sensibly to higher energy prices. With more disposable income due to tax cuts, we will find more efficient vehicles, insulate our homes, and make those behavioural changes that reduce the demand for energy and save us money. A bundle of subsidies (the previous Liberal government’s approach) will not be sufficient. The set of exemptions for the worst polluters coupled with a vague plan based on reducing GHG per unit of production, known as “intensity targets” (the approach of the Harper government and the Bush administration) won’t do anything but take us rapidly in the wrong direction. Our $50/tonne tax was actually reviewed for the Harper government in a secret report accessed by the Green Party through freedom of information. The study by Mark Jaccard and Associates found no economic impact from the tax, assuming its revenues were redistributed in the economy. Following our release of his plan, Dr. Jaccard noted that I was the only politician “being honest” with Canadians. Action is urgently needed to reduce GHG and avoid atmospheric “tipping points.” We do not have much time. The carbon tax shift is part of any serious and sensible solution. Originally written for the Sun Media Chain on July 12, 2007.