Ontario’s cap-and-trade carbon pricing scheme hasn’t started yet and there’s already talk Prime Minister Justin Trudeau’s government may impose a national carbon tax as well.
If that happened, and Ontario is included, it would mean consumers would be paying a tax on almost everything, twice.
Premier Kathleen Wynne’s cap-and-trade scheme is a carbon tax by another name.
It will raise the price of most consumer goods and services since virtually all of them consume fossil fuel energy.
A federal carbon tax layered on top of those higher prices would be a double whammy for Ontarians.
It would mean that in addition to paying an estimated $1.9 billion annually for cap-and-trade starting next year, they would also have to pay billions in taxes to the federal government.
According to the Globe and Mail, the Ontario Liberals are balking at the imposition of an additional carbon tax by their federal cousins, arguing it would distort the carbon market they’re entering into with Quebec and California and put too great an economic burden on Ontario businesses and taxpayers.
While that’s a statement of the painfully obvious, a federal carbon tax would cause even more problems.
The reason is that the U.S., for all of President Barack Obama’s green rhetoric, doesn’t have a national carbon tax.
That means imposing a Canadian carbon tax on Ontario businesses will put them at a further economic disadvantage with their American competitors, the same as Ontario’s cap-and-trade plan does, with the exception of businesses in California.
What this means in the real world is that the Trudeau government would have to grant major emitters across Canada exemptions from its carbon tax, or, alternatively, give then huge public subsidies, in the same way Wynne is handing out free carbon credits — meaning free public money — to major emitters in Ontario under cap-and-trade.
The purpose of these huge subsidies is to keep these businesses from fleeing Canada, and Ontario, for other jurisdictions, like the U.S., that don’t have national carbon pricing schemes.
The problem is these subsidies, aside from making taxpayers poorer since they pay for them, undermine the purpose of carbon pricing, which is to send a price signal to industry to lower industrial greenhouse gas emissions linked to man-made climate change.
This is why former prime minister Stephen Harper only supported carbon pricing if it was done in concert with the United States, our largest trading partner.
It was because he understood the economic downside to Canadians of introducing a national carbon price independent of the U.S.
If Trudeau goes ahead unilaterally with a national carbon tax — as Wynne already has with cap-and-trade — it will be because he doesn’t understand that reality, or doesn’t care about its adverse economic impact on Canadians, as long as the feds get their money.
Saturday, June 18, 2016, 7:27 PM Sun Editorial