Carbon Tax

Tax levied on carbon in fuels like petroleum and natural gas. Burning carbon is the main source of Carbon Dioxide (CO2) and thus Greenhouse Gasses, which contribute to climate change. The goal of a carbon tax is to combat climate change by increasing the price of things that contribute to CO2 emissions. While proponents say it’s paid for by polluters, opponents claim a carbon tax’s costs are really passed on to consumers. One of the most visible increases is the price of gasoline. Once a political hot potato, a carbon tax is no longer quite the minefield it once was and is now being implemented nationwide. Often mentioned together as primary examples of a carbon price, a carbon tax and a cap-and-trade system have the same goal but use different methods – a carbon tax is fixed price on carbon emissions (which aren’t limited), while a cap-and-trade system sets an overall cap on carbon emissions and then sells “credits” (whose price fluctuates) to those emitting carbon.

Common in Europe, a national carbon tax was first proposed in Stephane Dion’s “Greenshift.” The centerpiece of the Liberal Party’s 2008 election platform, it quickly became political fodder for the Harper Conservatives. Harper proclaimed the carbon tax would be an “economic catastrophe” and structured his campaign around attacking it – warning it would cause a “big recession” and even endanger national unity. Blamed for the Liberals’ historically poor electoral result, the party soon jettisoned the idea of a carbon tax. Yet Harper didn’t, continuing to trumpet his opposition. In 2012, the Conservatives proclaimed that the NDP’s cap-and-trade proposal would “increase the price of everything.” When Ontario implemented the system in 2015, Harper railed that “the reason governments do carbon taxes is not so they can reduce emissions but so they can get more tax revenue in the government’s pocket.”

Despite flopping nationally, the first carbon tax in Canada was introduced by British Columbia in 2008, under the center-right BC Liberal government of Gordon Campbell. By 2015, each of the four largest provinces (representing 80% of the population) were implementing either a carbon tax or cap-and-trade. Spurred by this, the Liberals revisited the issue in the 2015 election, though they stopped short of pledging a national carbon tax (once bitten, twice shy maybe?) Instead, Justin Trudeau’s party promised a “Medicare-style” approach, in which each province would have its own carbon price in compliance with national standards. Unlike in 2008, a carbon tax was not a major election issue.

Following the Liberal victory, the federal and (most) provincial governments agreed to a “Pan-Canadian framework” on carbon pricing. This obliged each province to set up its own system with a minimum price (or have the federal government do it.) This raised the ire of Conservatives, for whom a carbon tax remains a hot button issue (though some, like Reform founder and conservative godfather Preston Manning, make a right-wing case for it.) Promising all-out opposition to the plan, newly crowned Premier Scott Moe of Saskatchewan echoed the elder Trudeau by telling his son to “just watch me.” In Ontario, the PCs’ 2017 promise to keep the carbon tax went down terribly with its members – so much so that all its Spring 2018 leadership hopefuls are competing to be the most aggressively anti-carbon tax. One candidate flip-flopped on the issue in a mere 48 hours.

By 2020, the Trudeau government was pledging to increase the price on carbon more sharply than previously slated. With carbon pollution rebate payments flowing to families, time will tell whether opposition to the tax is finally exhausted.

Image source: The National Post

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