Four reasons to be skeptical of carbon taxes

Before we implement some grand strategy, it is crucial to consider the unintended and adverse consequences of a carbon tax.

(This column originally appeared in the Toronto Sun)

By: Candice Malcolm

Ontario Premier Kathleen Wynne recently confirmed that her government will soon roll out a plan to implement some version of a carbon tax or carbon price. Now would seem the perfect time. With fuel prices down, consumers are less likely to notice a tax top-up – at least until the world price of oil recovers.

The environmental crowd is giddy with excitement, but the likely outcome of such a tax would be little difference in fuel consumption (absent massive tax increases) but a significant difference in the after-tax income of Ontario households. Given the state of Ontario’s books, it isn’t likely that the new carbon tax would be offset by corresponding tax cuts.

Before we implement some grand strategy, it is crucial to consider the unintended and adverse consequences of such a tax.

Here are four reasons we should be skeptical of both carbon taxes and carbon pricing.

  1. Economic effects. There is a reason the Harper Conservatives call a carbon tax “a tax on everything.” Regardless of whether it’s a direct tax, or an indirect price that will be passed along to consumers, you will pay more to heat your home, drive your car, buy your groceries, and buy anything made in Ontario. Carbon taxes are a regressive tax, meaning they will have the biggest impact on the poor, and further harm those who already struggle to make ends meet.
  2. Unproven and dubious. Before we impose a tax based on the consensus of the elites, we should examine how that tax actually works when implemented. Whether we look at Norway, Australia, or BC, there seems to be an alarming trend: these taxes don’t actually reduce emissions. In BC, carbon tax proponents were thrilled to show how fuel consumption fell by 4.8% between 2008 and 2012, but they were reluctant to admit that fuel consumption jumped 6% in 2013, or that the number of BC drivers who bought gasoline in Washington State shot up from 3.9 million in 2008 to 8 million in 2013! People are not driving less in BC, they are driving more and shopping elsewhere.
  3. Track Record. The McGuinty government’s Green Energy Act (GEA) may go down as the worst policy disaster in Canadian history. First, they closed all the province’s coal plants and replaced them with subsidized green energy like wind and solar. These new sources proved so unreliable and inefficient that the government then scrambled to build gas plants — including the two that were cancelled at a cost of over $1 billion to the taxpayer. Premier Wynne has doubled down on the GEA, meanwhile, ratepayers have faced a 110% spike in energy prices. Is this really a government that has earned our trust to bring in yet another comprehensive green scheme?
  4. Contradictory policy. Carbon taxes and pricing are tools to artificially make CO2 more expensive in order to reduce consumption. But at the same time, the government is subsidizing the consumption of carbon by sending billions in bailouts and grants to auto manufacturers – producers of the very thing they’re supposedly trying to curb.

Of course all of this might be a little more palatable had the Liberals campaigned on this policy during last year’s provincial election. Not only did they not campaign on it, the premier told reporters in June that a carbon tax was not part of her government’s plan.