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Issue Profile: The Carbon Tax

In Alberta, we have this thing called a Carbon Tax.  You may have heard of it.  Truth be told, every other province has one too, but we’re concerned with Alberta’s.  Alberta was among the first to introduce a carbon tax.  The NDP campaigned on it and then… get this… did it once they were elected.  The nerve of some people.  The tax is relatively simple (although, not really and we’ll get to that).  An extra levy is added to things that emit greenhouse gases making them more expensive in an effort to incentivise people to use less.  Pretty straightforward.

Despite its simple nature, the carbon tax is one of the biggest issues this election.  That tends to happen when politicians intentionally make things more expensive (although, not really).  People hate this thing.  People love this thing.  Almost no one is indifferent to it.  But it is widely misunderstood by both proponents and critics.  You know what that means.  It’s time for the TTC explanation of the Carbon Tax (I’ll try to keep it shorter and more direct than our last Issue Profile).

 

Explaining the issue:

Here’s a short video that introduces things pretty well.  The NDP brought in the carbon tax.  In addition to the usual reasoning that it would encourage people to emit less carbon, Rachel Notley argued that by voluntarily doing it Alberta would gain extra leverage in our fight for pipeline construction.  Spoiler alert: no pipelines have been built since it was introduced.  The NDP didn’t simply introduce a straightforward carbon tax, arguing that it would disproportionately affect lower income families.  Instead they created a system where the tax would be collected and then rebates would be issued to people based on income.  The lower the income, the higher the rebate.  At least that’s the idea.

The addition of the rebate made the system a lot more complicated and harder to track how much the government was bringing in from this new tax.  You can get an idea of the rebate thresholds here.  So, because of the rebate system, it’s harder to track how much the tax brings in, but it’s also nearly impossible to track where the money goes.  The NDP says that all of the revenue goes into green initiatives like the LRTs and renewable energy grants.  But if we can’t track how much it brings in, we definitely can’t track what it funds.

 

Why is it an issue:

Because people hate taxes.  This isn’t ideological either.  All people hate taxes.  I hate them.  You hate them.  People may disagree as to what degree of taxation is necessary and prudent, but no one likes paying taxes.  This is a pretty big tax.  It makes almost everything more expensive in the end.  The UCP hates everything about the tax.  They hate the fact that there is a tax at all.  They really hate the rebate program.  They hate that it was implemented during a downturn in the oil industry that funds a big part of Alberta’s budget.  Of course, the UCP conveniently leaves out the fact that taxing carbon was actually a conservative idea.

So, the NDP and UCP are at opposite ends of the spectrum on this issue and both bring it up ad infinitum on the campaign trail.  The Liberals promise vague changes like making it “revenue neutral” while not really saying how or why.  The Alberta Party tries to claim the centre once again by advocating its elimination from all entities other than “big emitters.”  The reality is that any new tax will always be election fodder, and this one checks all the boxes for a wedge issue.

 

TTC’s take:

Let’s just call the carbon tax what it is:  A sales tax linked to the environment.  Even someone who advocates for it would have to concede this point.  In fact, that’s kind of the idea.  The average person (and certainly corporation) will not make environmentally conscious decisions unless there is financial incentive to do so.  And, of course, that’s where this whole thing becomes a mixed bag.

Remember the rebate program we just discussed?  The NDP estimates that 66% of households get at least a partial rebate.  A family of four gets back about $540 per year.  But people get that back based on their income, not how much extra they spent on the new tax.  So, people who find ways to spend less on the carbon tax (say by taking the bus instead of driving) can actually make money.  And the system still incentivises emitting less carbon.  For people who make more money, they system still costs them, but they don’t get the refund.

You may see the issue here.  Proponents of big government and social programs love that carbon tax kills two birds with one stone.  We help out the less fortunate while simultaneously lowering our carbon usage.  Win win.  But it’s only a win for people who lean progressive.

For conservatives, it gives them two reasons to hate the tax.  Not only is it an extra tax, but now it is wealth redistribution – both big time scary monsters for conservatives.  The UCP argues that the tax is killing jobs and that by eliminating it, we can create 6,000 new positions.  Where did they get that number?  From the clear, blue sky.  But there is no denying that it is costing businesses (particularly the ones that drive the Alberta economy) a lot.  It is worth pointing out that not everyone in the oil patch hates the system though.  Both Shell and Husky have come out publicly to defend it.

None of this even addresses how this tax disproportionately affects rural Albertans compared to their urban counterparts.  People who live outside large centres often have no other choice than to drive long distances in vehicles that need gas to run (Shocking, I know).  They have to use more natural gas and electricity to heat and power their homes.  So, they pay a much larger portion in carbon tax.  This money is then used primarily to fund green initiatives.  Things like mass transit… in cities.  There is a fair argument to be made that in addition to spreading wealth from high income Albertans to lower ones, the carbon tax also spreads it from rural Alberta to urban Alberta.

Polls show that the tax is wildly unpopular in Alberta.  That isn’t exactly ground-breaking analysis.  But here’s the thing:  Even if we get rid of it, the federal government will simply force their version of it on us like they just did to four other provinces.  Now, Mr. Kenney has vowed to join with other provinces and fight that tax in court.  But legal experts are split on whether that will work.  Moreover, the idea that Jason “Ottawa is the devil” Kenney would rather scrap a made in Alberta program with one from the federal government is a little rich.

Where a person stands on the Carbon Tax will largely depend on where they fall on the ideological spectrum.  Conservatives will usually be against it (again, forgetting it was their idea), while progressives will usually support some version of it.  The rebate program makes the tax much easier on families and lower income citizens, but that only makes it more polarizing.

So, go on, yell like a crazy person about the Carbon Tax.  At least now you can know what you’re yelling about.

 

I encourage you to comment with your thoughts.  I love to debate and clarify.  Before you engage though, please take a moment to review the FAQ and About TTC pages.

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