V i v i a n  S o n g
Freelance writer
Freelance writer
The carbon taxman cometh

Published in the Toronto Sun and Sun Media papers January, 2008.

The Tories may have put the kibosh on the notion of a national carbon tax last week, but the provinces are still breathing life into the idea.

It's a pattern reminiscent of the goings-on in the U.S., where states such as California, frustrated at the lack of progress by the feds, carved out their own aggressive climate action plans that exceed nationally set mandates.

While both the Conservative and Liberal parties have rejected a green tax, Quebec implemented the country's first carbon tax last October on oil and gas companies. The tax is expected to raise $200 million a year and will be used to help Quebec meet its Kyoto targets by 2012 and finance its own green plan.

Meanwhile, B.C.'s finance minister has warned residents a month away from the provincial budget that a carbon tax is within the realm of possibility and would materialize directly at the pumps. The tax would be "revenue neutral," meaning any tax revenues would be given back to the consumers or invested in green projects so as not to appear as a tax grab.

Nova Scotia's Energy Department has also gone on record saying though the feds have turned down the proposition, they're considering a tax on emissions as part of their own climate action strategy.

It may be an incendiary three-letter word -- fearsome for politicians and loathsome to taxpayers -- but other cities and governments have dared to take it on.

According to the New York-based advocacy group Carbon Tax Centre, Finland was the first country to introduce a carbon tax in 1990.

Sweden was quick to follow a year later. The tax doesn't apply to fuels used for electricity generation and industries are required to pay half of the tax.

Meanwhile, consumers pay a separate tax for electricity.

Last week the National Round Table on the Environment and the Economy published an advisory report at the request of the environment minister, stating the only way the government can achieve its goals of reducing the country's greenhouse gas emissions is to put a price on carbon emissions.

The independent panel recommended a carbon tax as well as a cap-and-trade system as the most effective way to achieve the government's reduction targets of between 60% and 70% by 2050.

But the environment minister has rejected the recommendation, to the dismay of advocates and to the delight of tax opponents.

A carbon tax would hit the poor and middle-classes hard in the pocket book, critics say. It would send the economy into ruins and won't change consumer habits, just as higher gas prices have done little to reduce driving habits, critics argue.

But it's the wealthy households which use more energy, says the Carbon Tax Centre: They drive and fly more, have bigger homes that need to be heated and cooled, and are bigger product consumers.

Were tax revenues to be redistributed to low-income families, they would get more in rebates than they spend on a carbon tax, the centre points out.

A carbon tax also avoids the price volatility of a cap-and-trade system and lends "predictability" to energy prices.

Price-responsiveness will happen over time, the centre says. Economic activity is closely tied to energy consumption, they add, and the economy has expanded during the past few years.

In the meantime, provinces are creating their own climate change strategies independent of the feds.

The U.S. won't allow states to have their own plan to reduce greenhouse gases faster than the federal plan. At a news conference, Bush defended the decision saying, "Is it more effective to let each state make a decision as to how to proceed in curbing greenhouse gases? Or is it more effective to have a national strategy?"

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