Carbon Taxes are endorsed by a majority of economists as a reasonable, if by no means the best method, for reducing carbon emissions. Forty-six countries have instituted some form of carbon tax, pricing it in Green House Gas (GHG) emissions per ton which currently run from around $1 (Ukraine) to $154 (Uruguay) with Canada due on April 1 to raise its tax from $65 to $80 per tonne. Canada has two levels of carbon tax: on CO2 producing fuels directly (this is the fuel you use in your car or home and pay at the pump) and secondly, an Output Based Pricing System (OBPS) which applies to industry when they exceed set levels of emissions. You can argue that a Carbon Tax is the most politically expedient of the policies a government might choose as it is redistributive, taking from those who can afford, giving to those who can’t, and that precious little of the collected monies are used to set up non-fossil fuel alternatives. Thus it is usually seen as a transition tax whose effect is to encourage well off citizens and businesses to adopt greener alternatives through an ever increasing cost on using fossil fuel.
Danielle Smith rails against the carbon tax telling us that ‘it is inhumane’. Pierre Poilievre has made eliminating the carbon tax a promise for a Conservative government. Scott Mo refuses to collect it. So what would happen if they got rid of it? Before April 1 the direct carbon tax at the pump was $0.1431 per litre, about 7.5% of what I just paid before April 1 to fill up my tank. According to Natural Resources Canada the average annual distance driven in Canada is 20,000 kilometres and the average fuel economy runs about 8.8 litres per 100 kilometres. Doing the maths we find the average Canadian purchases around 1760 litres of gas annually and the owner will thus pay around $246 in carbon tax at the pump each year. Carbon tax also applies to heating fuels: 12 cents per cubic metre for natural gas and 10 cents for propane. The average Canadian home uses 2385 cubic metres so pays a carbon tax of around $286 per year on natural gas. The light fuel oil on which the Feds put a 3 year tax moratorium is taxed at 17 cents per litre, 42% higher than natural gas, and forms more than half of the heating fuel source for PEI and Nova Scotia where natural gas must be imported from the US after the 2018 closure of the Canadian Sable Island gas fields. Fuel oil is almost unknown as a heating source from Quebec west. Eastern jurisdictions do not have the cheaper natural gas alternative; this is why Scott Mo’s removal of the tax on natural gas is not at all equivalent to the Liberal moratorium of the carbon tax on heating oil. These calculations produce similar results for the new $80 per ton price ($0.1761 per litre) of April 1 as both the tax and the rebates will rise.
Redistributive taxation to enhance equality has become a dirty policy after decades of successful Conservative propaganda labelling such taxation as unjust. The carbon tax, like road, health and education taxes, IS A REDISTRIBUTIVE TAX and, minus administration, all money collected for the fuel tax is returned to the province of jurisdiction to be redistributed by the provincial government to its less fortunate citizens. In the case of the fuel tax around 90% of the money collected is returned to those least likely to be able to afford it. A family of four in BC receives $894 annually if their income is below $50,170; as incomes rise above that level consumers get less and less until they reach a level where they get nothing. If a Canadian jurisdiction chooses not to implement a carbon tax the Federal government will do so. Just three jurisdictions in Canada have implemented both levels of their own carbon tax conforming to federal regulations: BC (the first), Quebec, and the Northwest Territories. The rest are a mixture of provinces who have enacted partial legislation with the slack taken up by the Federal tax. And just to shatter another stereotype, Alberta returns the highest redistributive amount at $1544, nearly twice that of BC.
So if the average Canadian family pays tax of around $532 for their car and heating this will be the average amount ‘put back in the pocket of consumers’ as Poilievre is fond of claiming. What he never says is that he will TAKE anywhere from $894 to $1544 OUT of the pockets of those least able to afford it while relieving those who can afford it of $532 in taxation. And, of course, Poilievre’s business buddies will get a truly big win as they will no longer have to pay millions for the OBPS. From these figures you can see that Poilievre is not talking publicly about what the results of cancelling the carbon tax will be for many fellow Canadians; instead he pushes the airy-fairy, Conservative motherhood statement that it would be good for business—you can probably work out why. And yes there are much better ways to reduce fossil fuel use but the carbon tax does help those with the lowest incomes during the transition.
Contemporary conservatives put the well-off above the many who struggle to make a living, asserting of the latter that their lot in life is their own fault and that, in any case, a rising tide lifts all boats. Milton Friedman, the conservative guru, once declared that “a relatively free economy is a necessary condition for a democratic society”. But then he added: “I also believe there is evidence that a democratic society, once established, destroys a free economy.” Perhaps Friedman was afraid that when the ‘free’ boats of the very, very wealthy have risen out of sight, a democratic society might rise up to sink them. Canadian Conservative economic theologians may maintain a bit of moderation but under Poilievre they are headed in Friedman’s direction of emasculating democratic institutions to ‘free’ economic ones, as successful conservative movements in other parts of the world have already done. To do so they have forsworn any useful policy discussion in favour of vituperation, invective, and vitriol against any and all who they feel oppose their lack of useful policy. Trudeau is correct, Conservatives are ‘misleading’ us as to the use and consequences of the carbon tax.
NOTE: Calculations in this article were based upon the taxation level before April 1, 2024 but similar ratios will remain in effect for the new price per ton.
Oakley Rankin
