Is NDP’s carbon tax a political payoff scheme?
Regardless of people’s income, new levy doesn’t seem destined to cut energy use
Greg Clark, the Alberta Party leader, alleges that the new carbon tax is already turning into a political payoff scheme.
He claims the NDP will overpay rebates by about $225 million in the first two years of the program, with the largest amount going to the lowest income earners.
“I have no doubt this is politically motivated, a move to win the loyalty of this group,” Clark alleges. “They’re trying to buy the votes of these people.
“Look, I have no problem at all with low-income people getting a rebate. And I completely agree with a revenue-neutral carbon tax. It can stimulate the growth of new industries to reduce carbon consumption. “But this is clearly excessive.” Environment Minister Shannon Phillips scoffs at Clark’s allegations.
“This claim is not at all backed by evidence,” she said in an emailed statement. “It’s a back-of-the-napkin calculation ...
“Our rebates are set at very similar levels to what B.C. used when they implemented their carbon price, and those were based on evidence. The most important piece of our plan is that ordinary Albertans are shielded from any of the effects of carbon pricing in these challenging economic times.’’
Clark says he also used Statistics Canada figures to come up with his results.
He estimates that for the cluster of people earning less than $20,000, the carbon tax cost will cost $56 million over the two-year period. But the amount rebated to those people will be $82 million.
That’s the highest repayment level, but Clark’s numbers also show that people in all eligible income categories are getting more than what they’re likely to pay in carbon tax.
He says that rebating the true cost of the carbon tax over two years (plus one fiscal quarter) would cost $895 million. Instead, the government will pay out $1.1 billion. Sixty per cent of Alberta households get rebates in a complex tiered system based on family income.
Phillips claims Albertans have already accepted the tax and are moving on. Maybe that will turn out to be true, if the burden is light after rebates, or if people actually gain. For a lot of Albertans, it could start to look more like an income supplement than a carbon levy.
But that raises questions about the whole purpose of the tax.
Isn’t it supposed to reduce carbon consumption? Indeed it is, but how likely are people to use less energy if they end up with more money than they pay into the tax?
Higher income people could very well accept the tax, since it’s such a tiny item in their budgets. But why would they reduce consumption? They may do so because of genuine concern for carbon reduction, but they won’t likely be moved by this tax.
Phillips herself suggests that the tax is as much a social measure as an impetus to carbon reduction. “I will not apologize for putting money in the pockets of Albertans who right now are struggling to get by,” her statement said.
On these terms, Alberta’s carbon tax appears to be far less a climate measure than a wealth transfer designed to help lower income groups. That’s a worthy goal, but there are better ways to do it than a carbon tax.
This tax also has a second major purpose. It’s meant to restructure the economy.
Over two years, $768 million from the tax and other sources will go into green infrastructure. The NDP will also spend $300 million on energy efficiency, and a whopping $1.68 billion will be used for “bioenergy, renewable energy, innovation and technology, (and) Climate Leadership Plan implementation.”
Those goals, at least, could actually reduce carbon use.
The rollout of the tax has been very easy on the NDP politically, partly because gasoline prices have drifted down. The tax at the pumps, 4.9 cents per litre, doesn’t appear very punishing.
But a tax that isn’t punishing doesn’t reduce consumption. It does, however, produce a hell of a lot of revenue to be used for income redistribution and economic engineering.
Which seems to be the point.