The new BC carbon tax takes effect July 1. The Liberals and Green Party are praising it, the NDP opposes it as a tax grab. The Federal Liberals have also put forward a carbon tax scheme which they promise to implement if they form government after the next election. Both the Conservatives and the NDP oppose the Liberal plan. Unlike the BC plan which is directly targeted at the consumer and raises the cost by applying the tax at the pump, the Federal Liberals say that their tax won't raise fuel prices. Apparently they are betting on the oil companies to absorb the increased cost.
The question to be asking here is why employ a tax to solve this problem in the first place? Cutting back on carbon emissions is a necessity if we are to preserve our civilization, though some are now arguing that it is too late and the best we can do is perhaps salvage part of it. Using taxes as a tool for social engineering, such as this, is a haphazard method that can not guarantee any specific result. The outcome of a tax attack depends upon the willingness of people to pay the tax, not on any obligation to change behaviour.
We know that according to many climate scientists we have to reduce our output of carbon gas by 80-90%. The most precise way to do that is to regulate carbon gas emissions directly by setting caps on how much can be emitted. To be fair this would have to include an organized form of rationing to ensure that everyone received an equitable share of the permissible emissions, and at an affordable cost.
It may be that the word rationing throws up a red flag for some, but the fact is that no matter how we deal with the issue of reducing carbon emissions, if we actually reduce them it involves rationing. The BC Liberal tax approach and the Federal Liberal approach are forms of rationing. What they do is ration carbon to people based on their ability to pay rather than on their need. In effect rich people can waste carbon to their heart's content while average people may have to do without to the point that their ability to survive is challenged.
Another feature of the proposed taxes is so called revenue neutrality. As the tax on carbon increases, the amount of that tax is rebated, either directly or through breaks on other taxes, at least in theory. One problem with this is that if there is no increase in tax revenue how do we fund new programs to help mitigate our carbon problem and develop greener ways of doing things without cutting into other programs like education, security, and health care?
Another problem is, if we are paying a carbon tax with one hand and getting it back from somewhere else in the other hand, where is the incentive to change our carbon using habits?
Of course changing our habits is not what these taxes are about. Our habits fuel our economy, and changing them threatens a lot of vested interests, interests that have invested in the major parties that have designed these initiatives. Stephen Harper and Carole James both call these tax plans tax grabs. What they are in reality are shell games to make the public think something is being done while actually not doing much at all.
The politically unpleasant fact is that in order to offer more than mere token gestures when it comes to dealing with our declining environment there will have to be considerable economic readjustment, and any future growth will be off of the table. In fact growth must be reversed until our level of demand on the system matches its ability to meet that demand sustainably.
In a society with no or reversing growth, the public welfare will have to be maintained through a more equitable distribution of wealth. An idea that is among the hottest of political hot potatoes. I suspect that instead of seeing politicians seriously tackle this problem we will see more shell games.