Monday, May 19, 2008

Like The Pope Denoucing You In St. Peter's Square

That's how the NDP should feel after hearing David Suzuki lambasting them over the carbon tax yesterday. I said their stance was a joke, but it is much more serious than that. Suzuki's denunciation has just cost the NDP a huge block of votes. Does anyone in the party understand that, or even care?
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  1. Well, the difference between price increases related to a carbon tax and those related to hard caps on polluters is straightforward - the latter example forces the actual big producers to make changes and while this may have cause price increase, it won't act directly as a regressive tax.

    See here.

  2. I understand the regressive nature of the tax. Some of that can be alleviated by spending revenue generated on public infrastructure like mass transit. Am I right or is deluded? My problem with the NDP's position is the blanket dismissal of taxing carbon, rather than saying "Yes, people should be taxed for generating GHGs but let's make sure it is done properly". I think, for example they could attack the whole "revenue neutral" crap from the Liberals. If you want to change consumer behaviour you have to make some choices more expensive and others cheaper. To suggest it will work if you merely change the pocket the money comes from rather than taking more money out of consumers of gasoline and giving it to riders of mass transit, I don't think you will do much to solve the GHG problem.

  3. I suppose one problem is that if such a carbon tax is "revenue neutral", there will be - by definition - no additional money for transit or investment in energy efficiency technologies. I agree in principle that making energy use more expensive will help discourage excessive use, but an additional tax only makes sense if energy prices were "low", but oil reached $133 per barrel today. That's my main issue with the idea of a carbon tax - if energy is cheap enough that people can afford to be wasteful, increasing prices via a tax makes sense. But oil prices have almost tripled in the past few years - if that doesn't change behaviour significantly, just how high would the tax have to be?

    That brings me back to the regressive nature of a carbon tax - we can talk about low-income rebates, certainly, but what about rural areas? Public transit is simply not good enough outside of Toronto, Montreal, Vancouver (though until recently it's been pretty bad there!) to be effective. We've been building cities via suburban sprawl for too long, and it will take billions of dollars in investment to expand existing transit and start planning better.

    Anyway, a much better idea would be to restore at least one percent to the GST (complete with existing GST rebates) and put it directly into transit - meanwhile, fuel and energy efficiency standards need to go way up. Since the price of energy is substantially determined by the price of oil, and the price of energy works into almost everything we buy, it only makes sense to go back to a consumption tax for "green" purposes. If Dion wishes to implement a carbon tax, he should just add 2% back to the GST and call it the "green" tax, putting 100% of the revenue into "green" investment of one sort or another.