John Ivison: Game-changing study suggests Liberal carbon tax plan would put more money in Canadians' pockets
John Ivison
September 19, 2018 7:54 PM EDT
Last Updated September 20, 2018 8:45 AM EDT
“Bring it on.”
That was Conservative leader Andrew Scheer’s response Wednesday to Justin Trudeau’s defence of the Liberal carbon tax and the Liberals’ willingness to fight the 2019 election on its imposition on provinces like Ontario and Saskatchewan that have served notice they won’t comply with federal carbon-pricing legislation.
The Conservatives have made it clear they see the cost to the average family of Trudeau’s carbon tax as their preferred ballot question next year, particularly after Doug Ford’s Ontario government cancelled the province’s cap-and-trade regime and joined Saskatchewan in its court battle contesting Ottawa’s jurisdictional right to impose the tax.
But new research will be released next week that is set to transform the debate.
The National Post obtained an advance copy of a paper to be released by Canadians for Clean Prosperity, a non-partisan group led by Mark Cameron, ex-policy director to Stephen Harper, that promotes putting a price on pollution and cutting taxes.
The Liberals’ Greenhouse Gas Pollution Pricing Act requires Ottawa to return tax revenue to the province where it was raised in cases where it has imposed a “backstop” carbon tax in the absence of a recognized provincial climate plan. Trudeau has indicated that, rather than sending a rebate to the governments of those provinces, he may choose to send the money directly to its households.
Research by environmental economist Dave Sawyer of EnviroEconomics suggests that in this scenario most households, regardless of income level, would receive more money from the federal government than they would pay in carbon taxes.
The Conservatives have long railed against the Liberals’ “tax on everything” but the study of three provinces suggests those households — particularly at the lower end of the income spectrum — would end up better off. The amount they receive would rise over time in line with the direct carbon tax, which will start at $20-per-tonne next January and rise to $50-a-tonne in 2022.
Sawyer’s research indicates that the carbon tax will cost consumers more when it comes to gasoline and home heating — at $20 a tonne,roughly 4.5¢ more per litre of gas. These direct energy costs, and indirect costs for things like the transportation of goods, will vary according to income band and province.
But, for example, in 2019 an Ontario household earning $60,000-$80,000 a year would pay an average of $165 more in increased direct carbon costs for energy, while in Alberta and Saskatchewan, where there is more coal-fired electricity, that figure would rise to $249 and $259 respectively.
In line with the rising tax rate, in 2022 those direct costs would rise to $332 in Ontario, $486 in Alberta and $511 in Saskatchewan.
There would be additional indirect costs, which for the same income band would add $74 in 2019 in Ontario ($177 by 2022); $73 in Alberta ($174 in five years time); and $73 in Saskatchewan ($174 by 2022).
However, the study estimates the rebate per household would be $350 in Ontario in 2019, rising to $836 in 2022; $868 in Alberta in 2019, rising to $1,890; and $1075 in Saskatchewan, rising to $2,394. If this scenario plays out, in five years the net benefit per household at that income bracket would be $328 in Ontario, $1,231 in Alberta and $1,711 in Saskatchewan.
The reason households would get more back than they paid? Carbon taxes will be collected not only from households but also from business and industrial emitters, and Sawyer’s modelling assumes that while the federal government would return some industrial revenues to large emitters, most would be rebated directly to households.
Lower income families would benefit disproportionately — for example a Saskatchewan household earning $20-40,000 a year would be $1,864 better off by 2022.
Cameron’s argument is that the objection to carbon pricing — that it will cost average households large amounts of money — is ill-founded, and can be mitigated by smart government policy. Clean Prosperity suggests that per-capita carbon dividends would be highly progressive (the biggest benefit would go to lower income households) and would not penalize emissions-intensive provinces — which, in fact, have more to gain.
It is an intriguing study, and one that is likely to make life easier for Trudeau as he prepares to impose his pricing scheme on provinces that don’t have one (or at least not one the feds recognize).
The Conservatives have been keen to make the carbon tax the biggest single issue of next year’s election campaign, on the premise that when the debate is over taxes, they win.
But in 2015’s campaign they found themselves outbid by the Liberals on giveaways, particularly the ridiculously generous Canada Child Benefit, and they may well be again.
Scheer has committed to meeting Canada’s Paris climate targets — emissions 30-per-cent below 2005 levels by 2030 — but without a carbon tax. That likely means regulation across a range of sectors that, while less visible, most experts suggest would be more complex and more expensive than a simple pricing mechanism.
The Conservatives will hope nobody notices. But the Liberals can be relied upon to point out that, while their plan will put money in the pockets of Canadians, their opponents intend to increase the cost of everything, for absolutely everybody.
https://business.financialpost.com/opinion/john-ivison-game-changing-study-suggests-liberal-carbon-tax-plan-would-put-more-money-in-canadians-pockets/wcm/94c270af-568a-4af2-88b4-a4d5d0d0c0d0
:no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/12561781/2000px_Price_history_of_silicon_PV_cells_since_1977.svg.png)
