All Your Carbon Tax Questions, Answered
Will Canada's new carbon tax save the planet? Will it make life more expensive? And what the heck is it, anyway?
New year, same impending global environmental disaster! Going about our gas-guzzling ways emitting carbon with reckless abandon is clearly not a great strategy for the world to continue to exist as we know it. In fact, climate scientists warn that if we don’t do something to curtail greenhouse gas emissions in the next decade, we’re screwed. That’s the scientific term for imminent worldwide devastation in the form of more drought, floods, hurricanes, forest fires, extreme heat, and poverty. You know, all the stuff post-apocalyptic movies are made of.
So, we know we have to do something, but what that something is has been up for heated debate here in Canada. Justin Trudeau’s federal government is about to implement a controversial (depending on who you ask) carbon tax that has left Conservatives on the attack, Liberals on the defense, and environmental econ experts in the middle of a political screaming match.
Simple questions about carbon tax like “how much will it cost me?” or “will it save my grandchildren from starring in a real-life version of The Day After Tomorrow?” seem to have complicated answers. Let’s cut through the political rhetoric and, with the help of some of the brightest minds on the issue in Canada, break down what’s fact and what’s fiction when it comes to the current carbon tax plan.
First thing’s first: What is carbon tax exactly?
The Liberals like to call carbon tax a “price on pollution.” Essentially, it’s a government-imposed policy put in place to discourage the burning of carbon-based fuels like oil, natural gas, and coal. Its aim is to lower harmful emissions by making it more expensive for companies to emit carbon dioxide and other greenhouse gases and thus, making the products they produce more expensive.
Which provinces will be affected by the federal carbon tax plan?
Only the provinces that didn’t have their own carbon pricing plans or cap-and-trade systems (an approach to limit or trade emissions within corporations) already in place. So that’s Ontario, Manitoba, Saskatchewan, and New Brunswick.
Is carbon tax the Dwayne “The Rock” Johnson of Canada’s environmental woes? Will it save the day?
Carbon tax may not defeat climate change with a single punch, but it will help. Bottom line: All the independent leading environmental scientists and economists I spoke to agree that, yes, a carbon tax will reduce carbon emissions. It goes back to one of the most basic human truths: people love cheap stuff. “We have lots of evidence that people respond to price changes,” saysDr. Jennifer Winter, an economics professor and a director of energy and environmental policy at the University of Calgary. “Why are Boxing Day sales so effective? Because the price changed!” Nicholas Rivers, professor and Canada Research Chair inClimate and Energy Policy at the University of Ottawa, says there are receipts to back up the effectiveness of carbon tax. “If you look at how people respond to the changing price of fuel, you can see really clearly over thousands of studies that people use less fuel when it gets more expensive. [People] produce less emissions when cost of emissions goes up.”
Real talk: I still have to drive a car and stay warm in these Canadian winters — is it going to cost me more money to live my life?
Ah, the cornerstone of the Conservative argument against carbon tax: It’s going to cost Canadians too much money. Mark Jaccard, professor of Sustainable Energy at Simon Fraser University, says that’s bull: “This is the narrative: It hurts the soccer mom trying to drive her kids to practice. It hurts the elderly couple trying to heat their home. It’s a lying narrative.” Rivers agrees that the idea that the plan will cost the average Canadian more money is “a mischaracterization of policy.”
Wait, the whole point is to make emitting carbon more expensive, right? So, how is it not going to cost more money?
Emitting carbon will cost companies more, but the impact on Canadians’ wallets should be minimal (especially if they make small changes in to reduce their carbon footprint). In fact, we’ll be getting all that money back via a government rebate come tax time. Here’s the carbon tax by the numbers: The tax will cost businesses $20 foreach tonne of carbon emitted, going up to $50 in 2022. If you do the math, that breaks down to a rough cost of living increase of $250 to $400 per household annually, depending on which province you are in, BUT each household will get a rebate that will pay them back these costs and more. As per the federal government’s plan, the average household should actually MAKE money after the rebate.
How much work do I have to do to get the carbon tax rebate? It sounds confusing.
You have to file your taxes. The plan officially starts on April 1, and you can apply for the rebate with your 2018 tax return.
Conservatives, including federal party leader Andrew Scheer, have referred to the carbon tax plan as a “job killer.” Is that true?
Not really? Winter and Rivers aren’t exactly conclusive on this. They both said that, basically, there are winners and losers in any governmental change but that the job market will not shift significantly solely because of carbon pricing. Jaccard is firmer: “These levels of carbon tax are definitely not job killers. The job market is moving all the time. There will be a few more jobs producing power and a few less jobs pumping gas at a gas station but to call it a job killer is incorrect.”
B.C. has had a similar carbon tax for a decade. How’s it working out there?
By all accounts, pretty well. Rivers has researched the effects of the B.C. carbon tax plans and says that, “If you look at studies of gasoline consumption, it looks like gasoline consumption has dropped by about 8 per cent. If you look at natural gas consumption, houses in B.C. have started to consume less natural gas as a result of this carbon tax compared to other provinces.” He also says that based on polling, British Columbians were resistant to the plan at first and are now supportive of it. Something to look forward to maybe!
Why is this plan so politically divisive?
Taxes are the worst. They are a thing we have to pay as good Canadian citizens but let’s face it: No one likes taxes, and it’s an easy play for a politician to harp on an opponent’s new tax plan. Jaccard doesn’t think carbon tax is the best option to solve global warming but he puts it like this: “We don’t address climate change if we don’t stop burning coal. So, if [Alberta United Conservative Party leader] Jason Kenney, [Ontario Premier] Doug Ford, or Andrew Scheer doesn’t have an answer for you on how we do that, they are lying to you. They need to explain exactly how we stop doing those things that wreck the planet for our kids.”
What would happen if we did nothing?
I’ll leave Dr. Jennifer Winters with the last word: “It would mean that we’re jerks.”