Stephane Dion's Green Tax Hoax

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Canada’s Liberal Party proposes a tax change that won’t change anything

by Ian Angus

Environmentalists from David Suzuki on down have praised Canada’s Liberal Party for its new “Green Shift” policy. Leader Stephane Dion announced it with great fanfare — a broadly-based carbon tax, coupled with sweeping income tax reductions. This, we are told, is the most effective way to reduce greenhouse gas emissions.

Oh yeah?

The Liberals say the plan will produce $15.4 billion in carbon tax revenues in its fourth year. To check this, economist Erin Weir took the Liberal’s proposed tax rates and applied them to the latest fuel consumption figures published by Statistics Canada. Here’s what Weir found:

“The $15.3-billion figure assumes that, in the Green Shift’s fourth year, Canadians would consume as much fossil fuel as in 2006.

“A major criticism of the Liberal plan has been that it sets no caps or targets for reducing emissions. Indeed, its numbers assume that the Green Shift will not change emissions at all.

“Of course, even if the $40-per-ton carbon tax would not decrease emissions, it could be useful as a means of raising revenue to invest it railways, public transit, building retrofits, renewable power and other infrastructure that would eventually decrease emissions.

“Unfortunately, the Liberals have instead committed the revenues to across-the-board tax reductions. Only $400 million in contingency funds, 2.6% of Green Shift revenues, would be potentially available for other purposes.” (Progressive Economics Forum, June 27, 2008)

Dion brags that his plan is revenue-neutral. Apparently it will also be emissions-neutral.

The Green Shift. Lots of sound and fury, signifying nothing.


  • True, the tax will “ramp up” over four years. That’s why Erin Weir used the fourth year tax rate in his calculation. At its maximum, the Liberals’ own projections say the tax will have zero impact on fossil fuel use.

  • The carbon tax is not slated to be in full swing for four years (ramping up $10/tonne/year), so the impact on emissions in the first few years will not be significant. Dion himself has refused to predict any favourable numbers for the first several years of tha tax, citing a goal of getting 20 per cent reduction by 2020.

    The liberals are still pushing cap-and-trade as well (Green Shift document, page 22; Liberals Carbon Budget, March 2007), and the Americans are clearly going to push us into cap-and-trade anyway. If we don’t, the US will impose tariffs, citing unfair competition as they will be pricing carbon emissions, and we wouldn’t be.

    If taxed emissions dropped before the first four year period is up, the carbon tax rate would possibly be upped to compensate.

    That being said, the next step is to tax other sorts of CO2 emissions not included in this immediate policy.

    From there we could move on to tax other pollutants, such as sulphur. When Sweden introduced the first tax shifting policy in the world back in 1991, it reduced income taxes by 1.9 per cent, and placed a tax on CO2 _and_ sulphur emissions.

    The Swedish experiment was quite successful. By year 2000, emissions were 25 per cent lower than they would have been, and were below 1990 levels.