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.
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.