Carbon tax inevitable, like it or not
No way to ‘opt out’ of what’s not in their purview ONTARIO TORY RACE
Here’s a sampling of headlines from the early days of the Ontario Progressive Conservative leadership race.
“Carbon tax in crosshairs of Ontario PC leadership contenders.” “Platform in limbo as candidates rethink carbon tax.” “Scrapping carbon tax would blow $4 billion hole in Ontario PC budget.” “By ditching carbon-tax plans, Ontario’s Tories become the Stupid Party again.”
You get the picture. The platform on which the party had previously intended to campaign, in those long-ago days when Patrick Brown was the leader, committed it to a carbon tax. The revenues from the tax, projected at $4 billon over three years, were to fund, in part, the platform’s hefty personal income tax cuts (the rest would be paid for with unspecified spending efficiencies.)
All of the major candidates in the leadership race having pledged to have nothing to do with the carbon tax — Doug Ford immediately and enthusiastically, Caroline Mulroney and Christine Elliott belatedly, after seeing how Ford’s position was playing with the membership — the party would seem to have renounced its platform, blown a hole in its budget and, er, become stupid.
Except … that’s not what’s actually happening. The candidates can’t promise to scrap the carbon tax, because the platform didn’t promise to implement one. What it promised was to acquiesce in a federal carbon tax. A PC government would “opt in to the federal carbon price backstop,” as the document put it, “rather than directly impose one of its own.”
Of course, “acquiesce” suggests the party has some choice in the matter. But in fact it has none. It might have chosen to implement its own carbon tax, in which case the federal government would have deferred in its favour. But in the absence of a provincial tax, the feds have served notice they would impose their own. Whether the province agrees to it is irrelevant. The feds have the power to act unilaterally.
The candidates’ declaration of opposition to a carbon tax is therefore as meaningless as the platform’s readiness to “opt in” to it.
Either way, the tax will be collected. And either way, the province will most likely receive the same amount in revenues. The federal government has pledged, as a technical paper explained last year, to “return direct revenues from the carbon price to the jurisdiction of origin,” meaning, as the platform put it, “the province will receive a transfer worth the equivalent of all carbon pricing paid for by Ontario citizens.”
(That at least is how it was understood until recently: an unconditional pledge to transfer any revenues from a federal tax to the governments of the provinces in which it was collected. Last month a new wrinkle emerged, in the form of draft legislation giving Ottawa the option to rebate the money it collects either to the government of a province, or to its citizens, depending on … well, it doesn’t say, but you can probably guess: depending on whether the province plays nicely. Whether the Liberals would really have the stones to discriminate between provinces in this way, based purely on how enthusiastically they endorsed a tax that would be imposed on them anyway, may be doubted. It’s the kind of thing that sounds clever, but could easily blow up in their faces.)
The news in the candidates’ declarations is, rather, that they have all vowed to repeal the Wynne government’s cap-and-trade plan, through which large emitters are permitted to buy and sell emissions credits — though, again, this is no more than what is in the platform.
When the Great Platform Revolt began, I had thought that their position would be just to default to the status quo, i.e. cap and trade, since a) this would not require them to do anything, b) the feds have said they would accept this in lieu of an explicit carbon tax, and c) the revenues the province collects from cap and trade, unlike a carbon tax, are invisible to the consumer. They could then claim to have averted the dread prospect of a carbon tax, while continuing to impose one via cap and trade.
But no, all pledge to repeal cap-and-trade, thereby guaranteeing the imposition of a federal carbon tax in its place: one that, as the platform boasts, would reduce the province’s carbon dioxide emissions by 10 megatonnes more over four years than what cap and trade would achieve. The sum effect of the candidates’ position, then, is to ensure precisely the thing to which they claim to be opposed.
That is the least of the contortions the Conservatives’ reflexive hostility to a carbon tax, or indeed to carbon pricing in any form, has required of them.
All claim to acknowledge the reality of climate change, yet they refuse to do anything meaningful about it. Or where they do commit to do something, it is by the most expensive, least effective means possible: regulatory and subsidy programs, the kind we already have in abundance at every level of government, and which have so signally failed to make much progress in reducing national emissions.
As ever, the failure to embrace carbon pricing remains a missed opportunity for Conservatives: not only to prove their bona fides on the environment, but to replace all those existing schemes — and to make deep cuts in taxes in the bargain: to use carbon pricing, not just as a shield, but as a sword.
The platform had begun to show some awareness of these possibilities. The Ontario Tories’ not-quiteabout-face will not materially change the policy of the party from that laid out in the platform. It will just ensure they get none of the credit.