Carbon taxes might not change consumer behaviour, but they sure will feed government coffers: Neil Macdonald
Canadians, a docile bunch, seem to have swallowed this without chewing
So, finally, we'll all be paying a carbon tax this year. For our sins, and for our poor sick planet.
Naturally, the governments requiring our money won't call it a tax. The professional euphemizers they hire to drip honey on political decisions are contorting themselves to come up with noble-sounding language.
The federal government has just introduced its "carbon pricing policy," as though we're all out shopping for carbon.
This is all Newspeak. Governments never spend, only "invest," and taxes are framed in language stressing the virtue of the outcome.
We pay "premiums" or "contributions" for schemes like the Canada Pension Plan or Employment Insurance (itself a euphemism; you insure against unemployment, not employment, but never mind).
We pay "surtaxes" and "surcharges," which are meant to sound as though they are exceptional in the extreme, my absolute favourite being Newfoundland's "temporary deficit reduction levy."
Governments collect "dividends" from alcohol monopolies. Hidden gimmicks like "unindexed brackets" take even more of our money.
All these measures are known to economists, and to lovers of plain language, as "taxes," taxes being defined as an involuntary appropriation of income, no matter how wonderful the goal.
And the carbon tax has the most wonderful goal of all, doesn't it? It is sold as something that will change behaviour, causing people to consume less carbon-dioxide-emitting energy, thereby helping save the planet and prevent our great-great-grandchildren from roasting alive, dying of melanoma, or drowning in rising sea waters.
Canadians, a docile bunch, seem to have swallowed this without chewing. My goodness, we need to grow some skepticism.
Feeding government spending
Governments, especially liberal governments, are hungrier than beagles. The Canadian economy has been blazing this past year, driving up government revenues, but Prime Minister Justin Trudeau's spendy administration nonetheless expects to have borrowed nearly $20 billion by the end of fiscal.
And, according to the government's own figures, $9.4 billion of that is a structural deficit, created solely by the Liberals.
Structural deficits are nasty things. Once they exist, they tend to pile up, and the books don't then balance themselves, as the prime minister somewhat gormlessly declared a few years ago.
The only way to eliminate structural deficits is to cut spending or raise taxes. Guess which choice he'll make?
A two per cent tax on beer is coming this spring, indexed to inflation. Expect more of that. And more talk about "paying a fair share."
But the carbon tax is the whale. It's already vacuuming up money at the gas pump — up to seven cents or so a litre right now, depending in which province you live. That's a ton of cash, and it's going to grow.
As for the virtue of the outcome, has the Canadian government made any effort to collect data and measure the supposed change in consumer behaviour?
Kevin Page, a former fiscal watchdog in government who now runs a similar project at the University of Ottawa, says a tax as serious as the carbon tax must come with oversight, and serious research to determine whether it is working.
Page adds, with his typical astringency, "in God we trust. All others bring data."
So I asked several government departments, including Environment and Climate Change Canada, what efforts the government has made to track carbon-based energy consumption. The answer, unsurprisingly, is none.
The most authoritative private sector source of information in Canada is the Ecofiscal Commission, an independent collection of economists who specialize in studying carbon taxation.
Ecofiscal strongly believes carbon taxes do change consumer and business behaviour, even though they acknowledge taxes are just one factor. But Ecofiscal also reckons the carbon taxes in place now, even with their built-in increases, aren't anywhere near enough to get the job done. (The job being to reduce emissions to 30 per cent of 2005 levels by 2030).
Fluctuating gas prices
As noted, carbon taxes have raised the price of gasoline at Canadian pumps by up to seven cents a litre. The federal government's eventual aim is about 11 cents.
But anyone who watches the price of gasoline, or uses an app like GasBuddy, knows that the fluctuation in prices overnight, or between gas stations in different neighbourhoods of the same city, can easily exceed seven cents a litre. GasBuddy reported a spread of .37 a litre in Ottawa this week.
So how can a tax people barely notice make them more responsible consumers of energy?
Dale Beugin, of the Ecofiscal Commission, says carbon taxes will probably need to rise to $200 a tonne or more – four times the federal benchmark of $50 a tonne by 2022.
But even the Canadian tolerance for taxation is limited, and such a hike would take both political courage and long-term resolve, neither of which comes easily to governments elected once in four or five years.
So, what we have instead are taxes that are insufficient to accomplish emissions objectives, yet still provide governments with lots of the cash they crave.
No wonder, then, the federal government is keeping secret its own analysis of what its "carbon pricing" will bring in. It censored the figures in a document released last year under Access to Information, and Finance Minister Bill Morneau answered questions – or, more to the point, didn't answer them — with the usual condescending Liberal treacle about helping the middle class. (The similarity of this bunch to Stephen Harper's is sometimes remarkable).
Aaron Wudrick of the Canadian Taxpayers Federation, hardly an organization that promotes tax hikes, puts the question of carbon taxes neatly.
Governments "need to go big or go home," he says. Timid, meagre measures will accomplish nothing other than taking more money from taxpayers. Just another tax, in other words. Which is where we are now.
Oh, one other thing: the original promise was that carbon taxes would be "revenue neutral" – returned to the public in the form of tax rebates or lower rates in other areas.
Well, the GST was supposed to be revenue neutral, too. That didn't last long, and, neither has the promise of the carbon tax.
It's now feeding the aching hunger of government. Beagles gotta eat.