Raising the carbon tax
Posted April 21, 2009 by Sacha Peter - Link
Category: BC Greens, Economy, Environment
Comments (2)
The Green Party sent out a press releasing calling for an increase to the carbon tax (Media Release).
Victoria, BC –– The Green Party of BC is calling on British Columbians to support an increased tax shift on green house gas emissions from $10/tonne to $50/tonne.
The $10/tonne (now $15) shift by the BC Liberals is a start, but BC Greens would shift more sooner — starting with $50/tonne,” said Jane Sterk, Leader of the Green Party of BC.
“Since revenues from the tax will be used to reduce payroll and income taxes, most British Columbians who have choosen alternates to burning hydrocarbons have already increased their overall revenues. Along with the GST rebate and lowered personal taxes, some low income, northern and rural dwellers have also seen reduced expenses.”
The press release looks rushed and not researched properly.
The second paragraph states that the carbon tax is levied at $10 per tonne, but then states it is now $15 – it is not. It will be $15 as of July 1, 2009, and $20 as of July 1, 2010, and $25 as of July 1, 2011, and then the last legislated increase is $30 as of July 1, 2012. Presumably this legislation will be extended if the BC Liberals are re-elected.
The third paragraph is badly worded and is plainly incorrect. Revenues from the carbon tax cannot be used to decrease payroll taxes (CPP and EI) mainly because these are federal jurisdiction items. The provincial government cannot directly reduce these payroll taxes. Saying that the carbon tax, from an individual perspective “increases overall revenues” is also incorrect phrasing; “reducing expenses” is proper. Finally, the GST rebate (another federal jurisdiction matter) has nothing to do with the provincial carbon tax.
This isn’t the first time the provincial Green party has mixed provincial and federal jurisdiction matters; in their original platform document, they stated they would accelerate capital cost allowance rates for “green” capital expenditures; and also permanently put in place the oil drilling moratorium – both of which are federal matters.
Politically, calling for a carbon tax increase is not going to win mainstream voters for the Green party; especially since this release does not explain in a concrete fashion (i.e. dollars that are planning on being spent for various initiatives) on how the revenues from such a tax increase would be utilized – there is reference to “Initially money would be directed toward programs in rural and northern communities”, but somehow I doubt those communities will be thrilled about this. The press release also implies that the “revenue neutral” aspect of the carbon tax (i.e. every dollar collected from carbon taxation will no longer be applied to tax reductions elsewhere) will no longer be adhered to.
The impact of a $50/tonne carbon tax, assuming a 10% reduction in consumption of fossil fuels over projected 2009-2010 levels, would be a $1.42 billion dollar per year tax increase over and above the 2009-2010 budgeted amount (of $546 million). A $50/tonne carbon tax would represent a 11.7 cent tax per litre of unleaded gasoline.
Finally, keep in mind the title of the press release was “Green Tax Shifting Reduces Emissions Without Increasing Taxes”, which is completely inconsistent with what the rest of the press release stated since the tax increase would be approximately $1.42 billion, assuming fossil fuel consumption is reduced by 10%.
While I am not sure that the GPBC realizes they have crossed a jurisdictional constitutional boundary with their 2009 policies and the April 21, 2009 release, I beg to differ with the thrust of your analysis that they could not do so as the Government of BC.
Quebec, for example, has negotiated a pension plan agreement with the federal government that is limited to their jurisdiction and the Grant Devine Conservatives enacted a pension plan for housewives in Saskatchewan. Likewise Alberta negotiated a form of payment for the old Family Allowance that was different from the way families were paid in Saskatchewan and BC.
You need to remember that Canada is a constitutional confederation, not federation and that the BNA Act 1867 (Canada Act, 1867) is replete with jurisdictional exceptionalisms.
There has also been considerable to and fro around sections 93 and 94, most notably the Canada Health Act, whereas health was initially set up as a provincial jurisdiction. Then in the 1960’s to 1980’s WAC Bennett, Peter Lougheed and Allan Blakeney all set up crown corporations to thwart federal taxation jurisdiction, the initiator being WAC Bennett with the creation of BC Hydro so he could exclusively obtain the benefits from the Canada/US Columbia River Treaty, followed by Pacific Western Airlines in Alberta, Sask Oil and Sask Potash vis a vis section 125 of the Canada Act 1867.
So I think you should limit your remarks and critique to those that are apt for realpolitik in Canada.
Andy Shadrack
retired poltical scientist
If the wording in the platform was “Work with the Federal government to…” then I would have no problem with the wording. The wording as-is suggests that the provincial party can do things which are clearly in the federal domain.
Explain what mechanism is available in terms of taxation to reduce the capital cost allowance provincially, for example. There isn’t one. You would have to create a new provincial branch to keep track of allowed capital costs to give out provincial refunds. At this point you might as well create a provincial example of “Revenue Quebec”, and this is how corporate taxation works in Alberta and Quebec. It’s pretty clear that nobody in the Green Party has ever filled out a T2 before so they wouldn’t think about the practicality of some of the suggestions.
I’m not trying to pick on the Green party, just that their inexperience shows when it comes to policy and economics – and believe me, the BC Liberals and NDP have some policies that are out to lunch as well.