The Carbon Conundrum
A ‘tax on everything’ will hurt Alberta’s competitiveness
On January 1, the Alberta carbon
tax kicked in. It’s in addition to a large-emitters tax on industry and, by extension, on consumers, that has been in effect since 2007.
The Alberta government has decided to take this tax a step further and charge us for the carbon dioxide that we emit—driving our cars, heating our homes, cooking dinner, literally everything we do. This individual carbon tax is a “tax on everything” because there will be an extra cost that will be felt throughout the supply chain. Very few others on this continent pay such a tax so the effect will be a severe dampening of Alberta’s business competitiveness.
A tax affecting the entire supply chain will have significant impact on our food supply. Grain handlers and meat processors will pay for it on their operations; truckers will pay extra to transport goods and grocery stores will pay extra for their operations. Food costs are going up.
Competitiveness is really what Alberta and Canada should be targeting, but instead our provincial and federal leaders are piling on costs like they’re going out of style. These include corporate tax hikes, a doubling of the large emitters’ carbon tax, a huge increase to the minimum wage, more regulations leading to longer delays for industrial approvals, in addition to the new carbon levy.
Perhaps Alberta should have just introduced a real sales tax instead of going through the backdoor. The finance minister has said repeatedly that new revenue is required and this tax accomplishes that, to an estimated $3 billion. Government revenues will go up but that takes more money out of the economy. Most importantly, this tax on everything will do nothing for the environment.
Albertans have been told that the carbon tax will get us “social license” for pipelines. But many commentators disagree. The National Energy Board approvals system has little to do with what happens at a local level and Canadian history has shown that this isn’t new. Writing about a project in the 1950s, former Westcoast Energy president Ed Phillips, famously said: “Pipelines, politics and logic don’t mix.”
What the tax will do is build an incredibly large slush fund for the government to spend on pet projects and to “diversify” the economy. The last time a government prepared to take on this much risk, taxpayers ended up paying for huge losses on Nortel, the Husky upgrader and other boondoggles.
Do Albertans and Canadians want to do their part to protect the environment? Of course we do. But we also need to protect the economy. The government should continue to do everything it can to ensure that energy producers reduce all emissions— nitrogen oxides, sulfur, volatile organic compounds and, yes, carbon.
Investments are already leaving the province rapidly. Investors appear to have little or no confidence in the direction in which Alberta is heading. That should tell us everything we need to know. The oil sands emissions cap being introduced to accompany the carbon tax is restricting the ability of the Canadian producers to bring in capital to compete with the large multinationals.
The Norwegian carbon tax has had very little effect, at least in terms of CO2 reduction. The B.C. version has failed to reduce CO2 emissions but we hear economists say the reason is that it’s not high enough. And that is the primary issue: it is never high enough. The fact remains that it is never going to be high enough for climate activists, until we stop using oil and gas. And why on earth would Canadians, blessed with tremendous natural resources, want to stop selling and using those resources to our benefit?
The effects that we have seen from jurisdictions that have brought in aggressive climate policies have been very negative. Germany, Great Britain, Ontario have all seen enormous increases in electricity costs.
What does the NDP plan to do with the electricity sector? We don’t know because they’ve been silent on how coal closures are going to work. However, it is safe to assume that the results are going to be disastrous for consumers in terms of significant rate hikes.