The Trudeau government is bringing in a new way to make lives harder for every Canadian: Carbon Tax.
Simply put: This Carbon Tax will raise the price on absolutely everything that you pay for.
If you have Facebook then this link: Justin Trudeau: Polluting is Free shows him trying to justify carbon tax by saying “polluting has been free” and that the best way to get polluters to stop polluting is to introduce this carbon tax. He justifies this by saying that if you get two companies that feed their effluent in to a river, and one of them feeds pollution in to the river, that you then have to add a filtering station to clean up that pollution. The carbon tax is described as a way of paying for that expensive filter.
This is taking a very complex problem and providing a very simple explanation for it. Unfortunately the metaphor doesn’t cover some very key issues that make the problem complex:
- In Trudeau’s example the polluter pays the carbon tax. As implemented the consumer pays it.
- In Trudeau’s example the pollution is limited to a very small stretch of the river. There are no external factors. In real life the rest of the world is creating pollution as well.
- Adding cost to a thing doesn’t get people to stop buying that thing, if it’s what they want or need. Gas and cigarette taxes have proven that over and over again.
It’s great to take complex problems and be able to explain them simply. Chris Hadfield, Canada’s own star astronaut (pun not intended, but I laughed when I realized what I typed), has done an amazing job of that. Did you see what happens when water is released in a gravity free environment? Surface tension causes it to make a ball. It’s incredibly cool. Did you see what happens when you shake a can of pop and open it at the bottom of the sea? Nothing. Why do these happen? The answers are complex. The examples are simple, and effective, and accurate, and proven, and we can trust them.
Let’s look at each of the points that I’ve made, above, and see why they don’t work:
1. In Trudeau’s example the polluter pays the carbon tax. As implemented the consumer pays it.
When the producer – the polluter in Trudeau’s example – pays the carbon tax they have a financial incentive to reduce their pollution. They can invest so that they filter the effluent, and then since they are polluting less, they are charged less tax.
For Trudeau’s plan to work the carbon tax would have to be different for each producer. If one producer created more pollution then their portion of the carbon tax would be higher. The consumer can choose to buy from a different producer, and so the high polluting producer would feel the hit.
Since Trudeau’s example has the consumer paying the tax, not the producer, the amount of tax is the same for all producers. Some producers may invest in pollution reduction mechanisms, but they will receive no financial incentive from the carbon tax for that. In fact those investments will mean that their costs will rise, and their profits will not.
In this case Trudeau’s carbon tax has provided a dis-incentive to invest in pollution reduction.
2. In Trudeau’s example the pollution is limited to a very small stretch of the river. There are no external factors. In real life the rest of the world is creating pollution as well.
In Trudeau’s river there is clean water at the top, the producer’s of pollution, a filter, and clean water at the bottom. It was an almost closed system, and there were no other factors.
In the real world we have international trade – buying from other countries, and selling to other countries. The carbon tax is still applied to the things that we buy from other countries, and the price will go up on the things that we sell to other countries. In both buying from and selling to other countries the carbon tax will have a negative effect on our purchasing power.
Just like it will not benefit domestic producers, the carbon tax will not benefit foreign trade.
3. Adding cost to a thing doesn’t get people to stop buying that thing, if it’s what they want or need. Gas and cigarette taxes have proven that over and over again.
The cost of gas has gone up and up and up. Have people been driving less as a result? No, we have been driving more. We also all assume that the cost of gas will go up at the start of a holiday week-end, and yet we still go away for the week-end. We have less money, so we do fewer things, but we still go away.
The cost of cigarettes has skyrocketed. Have people been smoking less as a result of the cost? No. The reduction is smoking is because of other factors. We have made it less convenient to buy and to find places to smoke, and we have added horrible pictures and warnings to the packaging.
When you add to the cost of something you reduce the ability to buy, and you make other things harder, but you don’t provide a disincentive to buy.
Trudeau also says that he is giving the money back to all of us. This is misleading.
In the video Trudeau also says that he is giving all of the money back to us. None of it is going to the federal government. While it may be true that none of it is going to the federal government, it is not true that he is giving it back to the consumer. That money will end up in the general funds of the province. It simply means that the provinces will now have an additional tax that they can spend.
Will the province give us back the money in the form of a tax break or tax credit? BC says that it will; other provinces still haven’t said that. It is likely that most provinces will add it to their general revenue and increase the size of their government. It’s hard to say what each province will do with the money that they have to collect.
Simply put: This tax is bad. The price of everything will go up.
Everything that you buy – from energy to food to a car or a house – will increase in price. In some cases this cost will be applied directly through the carbon tax. In other cases, where the product is exempt from being taxed, it will be applied indirectly. This is because the cost of production will still go up, because of the tax, and so the base cost to the consumer will go up.
One standard that every premier should take is to fight the carbon tax, since it is bad for their citizens.
One of the first thing that Prime Minister Scheer should do is eliminate the carbon tax.