Carbon tax not 'economy killer' as critics suggest, economist says

A Calgary economist says the NDP government's upcoming carbon tax won't come free, but it won't be an "economy killer" either, as opponents of the tax suggest.

But it's not the greatest thing since sliced bread either, adds Trevor Tombe

University of Calgary Economics Professor Trevor Tombe says nearly all economists believe a carbon tax is the cheapest way to lower emissions. (CBC)

The NDP government's upcoming carbon tax won't ruin the province's finances despite opponents' claims to the contrary, a University of Calgary economist said Tuesday.

"It won't be free, but it won't kill the economy," said Trevor Tombe, a research fellow at the School of Public Policy.

An "economy killer" is how the head of the Alberta Wide Rally — the group that's launched a petition to hold a plebiscite on the tax — described the levy to the Calgary Eyeopener on Monday.

"This is will dramatically harm not only the Alberta advantage," Todd Beasley said, "but it will absolutely destroy the Canadian advantage given that the United States has said clearly they are not going to install a carbon tax."

During his turn at the Eyeopener's mic on Tuesday, Tombe said strong opinions are to be expected around such a contentious issue.

Lollipops won't fall from sky

"Opponents are not surprisingly going to say that the sky is going to fall as a result of the policy," Tombe said.

"And proponents will say just the reverse — that it's the greatest thing since sliced bread and that lollipops will be falling from the sky after we implement it."

The truth, Tombe believes, is somewhere in between.

"And economists are almost universally convinced by the evidence that pricing carbon through, for example, a carbon tax is the cheapest way to lower emissions."

Tombe said there are some estimates about what the tax will mean for the economy and "roughly speaking, it will probably shave about 0.05 per cent off our annual GDP growth for a couple of years."

When it all shakes out, he said the overall reduction to the economy could be slightly less than that.

The NDP will begin implementing the tax in January.

With files from the Calgary Eyeopener