The Syncrude plant at Ft McMurray, Alberta. The Liberals and NDP unveiled their climate action plans Tuesday. (Jason Franson/THE CANADIAN PRESS)

Politics: Looming environmental tax trouble for Trudeau

An election concern in 2019

As part of his environmental platform Canada’s Prime Minister said he would impose a federal carbon tax on any province that didn’t institute their own tax.

Alberta already has a carbon scheme of about $30 per tonne, British Columbia currently prices at $35 /tonne, and Ontario’s cap and trade system equates to about $18+ per tonne for companies.

Doug Ford says when he takes over as Premier at the end of June, scrapping the provinces cap and trade carbon tax scheme will be a priority. (Doug Ford Twitter)

The federal scheme would start at $10/tonne and rise to $50/tonne by 2022.

However, the recent election of Rob Ford as Premier of Canada’s  biggest manufacturing province is likely to shake Trudeau’s reputation and position.

Ford has said that carbon taxes drive away businesses and has vowed to scrap the three-way carbon cap-and-trade deal that the previous provincial government made with neighbouring Quebec, and with the U.S state of California.

This would force Trudeau to levy the federal tax on Ontarians which would certainly be an unpopular move in the country’s most populous province, especially with the federal election looming.

By ending the cap-and-trade deal, Ford could cut fuel prices at the pump by about 4.3 cents. Lower pump prices are always appreciated and would put Ford in a popular position. However, a subsequent imposition of a federal tax would then increase pump prices which would again be something immediately noticeable to the average voter who would easily blame the federal Liberal government.

After reaching record high prices across Canada in April, pump prices have diminished slightly. In British Columbia carbon taxes initially reduced consumption, but that has since climbed back up. (Gian-Paolo Mendoza/CBC)

Ford meanwhile may have painted himself into a corner with promises of tax cuts to fuel, thereby removing a substantial source of revenue in a very heavily indebted province.

Under the law, the federal carbon tax money has to be returned to province where it was raised. The only weapon the federal Liberals have would be to return it as a dividend directly to citizens, and not to an “unfriendly” government for its own needs.

Nevertheless, Ford has also said he would fight the imposition of the federal tax in court and so join Saskatchewan in opposition.

That prairie province has already said it will fight the carbon tax in court.

Adding heat to the governing federal Liberals, the opposition Conservative party has been demanding the Trudeau government tell Canadians how much the carbon tax would cost them individually.  Although they know the figures, the Liberals have so far chosen not to answer that question, although on June 30 they released a report that said such a tax would cut about $2 billion from the economy but which also noted that growth (Gross Domestic Product) would be unaffected with or without a carbon tax.

The prospect of two provinces publicly attacking the federal government  along with the main opposition party in Parliament on an issue the voting public can easily identify with does not bode well for the Prime Minister.

Federal Conservative leader Andrew Scheer accuses the Liberals of hiding the true cost of their carbon tax scheme. Many pundits say the tax won’t do much to reduce greenhouse gas, and is just an excuse to raise revenue. (The Canadian Press)

While there are so many issues mounting and with a general election coming a year from now, the idea of a carbon tax is slowly rising to priority position.

Meanwhile critics have said even if the federal plan to tax carbon is instituted ( $10 tonne in 2018 rising to $50 a tonne by 2022), it won’t help Canada meet its climate goals but does seem destined to fill government coffers.

The Conference Board of Canada (non-profit economic think tank) and the Canadian Academy of Engineering for example said in a 2017 joint report that, “Carbon pricing will help Canada reduce emissions but the reductions will fall short of the government’s goal of a 30 per cent reduction from 2005 levels by 2030″, and it said that, “even if carbon taxes were to reach $200 per tonne by 2025, this would only result in a 1.5 per cent reduction in GHG emissions outside of the power generation sector”.

Aaron Wudrick, federal director of the Canadian Taxpayers Federation wrote in a Financial Post editorial in April that advocates of the carbon tax,” can either admit to Canadians that slashing carbon emissions will be expensive, difficult and painful, and all the sacrifice could well be for nothing if other countries aren’t doing the same. Or they should just admit this is nothing more than a plan for filling up government coffers”.

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