Elizabeth May's carbon-tax plan unrealistic

With the boundless luxury of not having to worry about implementing any promises, federal Green party Leader Elizabeth May talked up her party’s version of a carbon tax this week.

The more she talked, the more complicated it looks. It’s an entirely theoretical position posted to maintain the Greens’ street cred on climate change. But even just as an academic exercise, it looks like a very complicated and expensive way to put a price on carbon emissions.

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The “carbon fee and dividend program” has been on the party’s books for a while, but May reintroduced it in advance of an anticipated burst of publicity around the Vatican’s upcoming pronouncement on climate change.

It’s not likely to upstage Pope Francis.

The Green party concept borrows the crucial revenue-neutrality concept from B.C.’s seven-year-old carbon tax, but delivers the payback to consumers in a different way — a direct annual cheque to every adult Canadian. That adds a big administrative cost to the concept. And imposing such an idea nationally at a time when various provinces are already pricing carbon in different ways would be an exercise in quilt-making — as in, patchwork refinements to recognize the different provincial regimes.

May said she’d like to talk “about making it more palatable to Albertans by saying all the carbon fee collected in Alberta would be returned to Albertans, and all the fee collected in B.C. would be returned to B.C. residents.”

She said the fact British Columbians already pay a carbon tax would have to be taken into account. One set price applied nationally would make for inequities across Canada, depending on what each province is doing in pricing carbon.

So it “would have to be worked out in each province,” she said. Ideally, it would be a “backfill” position, to impose the tax where provinces aren’t doing the same.

“It’s not a tax, because it returns the fee collected to a central pool where it is immediately reallocated to every [adult] Canadian,” she said.

The B.C. carbon tax includes a legal requirement to cut other taxes so that the total tax reduction is at least equal to the amount raised by the carbon tax (which is most noticeable as a seven-cent addition to the price of a litre of gasoline).

The latest annual report shows consumers collectively come out ahead, as they have every year since it was introduced. The carbon tax raised $1.2 billion last year, and the corresponding tax cuts were worth $1.4 billion. In the current year, the spread is expected to be about $360 million in taxpayers’ favour.

On an individual basis, taxpayers benefit directly by cutting emissions through reducing fuel consumption, since the tax cuts are already locked in by law. And they seem to be taking advantage, as fuel consumption has dropped measurably over the years.

The Green party version would see a carbon fee of $50 a tonne (B.C.’s tax is $30 a tonne) imposed at the wholesale level. Fuel prices would obviously increase, but consumers would get a “dividend” cheque every year from the government, calculated to cover the extra they would have paid.

The cheque might be a more direct incentive to cut emissions than the tax cuts. But the varying arrangements needed to make it fair nationally make it a very complicated process.

May went so far as to claim that the carbon fee and dividend would help reduce poverty.

“When that dividend cheque comes, it’s an identical cheque whether you’re the poorest of the poor or the richest of the rich,” she said. “It’s a much larger proportion of your revenue when you’re poor than if you’re wealthy, so that’s the beginning of a program to take on poverty.”

“Tough, meaningful, aggressive, realistic” was May’s description of the stance. Tough and aggressive are accurate, but meaningful and realistic are open to debate.

The bigger goal is to move Canada painlessly off the “dirty old fossil-fuel economy” with huge reductions in emissions on a schedule years ahead of any timetable other parties are talking about. But it will be a while before the Greens find themselves responsible for executing the plan.

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