Carbon tax win vs. Wynne
Anational carbon tax and its troubled cousin, cap and trade, are destined to become major political losers for governments that impose them, especially as costs escalate for middle- class and lower- income Canadians. The prime minister’s encounter l ast month with Kathy Katula, a disabled woman with four children, struggling to make ends meet, is a precursor to looming popular discontent.
With only $ 65 every two weeks to feed her family, Katula asked Trudeau to justify the additional burden she’ ll face from his green tax. Many like her across the country must be asking a similar question, especially in Ontario where hydro rates are out of control. Their financial struggle will worsen as the cost of the carbon tax to the average household i ncreases from over $ 500 next year to over $ 2,500 by 2022. As the public’s pain worsens, the political blowback is sure to intensify.
Ontario’s c onvoluted cap- and- trade scheme will cost in aggregate at least $ 1.9 billion and likely more, but will have no discernible impact on global temperatures. It will render job- creating businesses less competitive internationally, especially with our biggest trading partner, whose new president is going in the opposite direction by reducing burdensome, costly and dilatory regulations. The carbon tax is quintessential bad policy: it fails to achieve its stated purpose but imposes significant costs and produces unintended negative consequences.
Perversely, while the Ontario government is focused on climate change, more immediate environmental threats are languishing. According to last year’s Ontario auditor general’s annual report, “In 2013, southern Ontario ranked among the highest in Canada for emissions of sulphur dioxide and fine particulate matter— contaminants known to cause respiratory prob- lems.” Furthermore, according to Environment Canada, 22 per cent of Ontario’s rivers were rated as “marginal or poor quality” compared to the national average of 14 per cent.
So Ontar i o Pr e mie r Kathleen Wynne is f ailing to deal with immediate health threats that she can do something about, while she obsesses, at great cost, about a global issue she can effectively do nothing to address.
Wynne’s approval rating is in the mid- teens. Twothirds of Torontonians want her to resign. But there are no guarantees in politics, as the past three provincial elections dramatically demonstrated. She isn’t yet a dead premier walking.
But when a substantial portion of the province is deeply concerned about something their government is doing, the Opposition party should want to be on the side of the discontented. However, Ontario PC l eader Patrick Brown supports a price on carbon, depriving his party of the opportunity to attack the Liberals on an issue of growing vulnerability.
Brown probably wanted to remove the environment from the coming election and avoid false accusations that he is a “denier” or indifferent to climate issues. Now, with Republicans in total control of the U. S. government, there is zero chance the U. S. will adopt a carbon tax, which could give Brown a credible way out. Protecting the competitiveness of Ontario businesses is a strong rationale for revisiting his pro- carbon- tax position.
Unfortunately, because the first cap- and- trade auction will be held this August, with the compliance period running to 2020, there is no practical way to withdraw from the Western Climate Initiative with Quebec and California until t hen. Between 2017 and 2020, Ontario’s government will increase the cost of fossil fuels in the province by $8 billion, yet astonishingly, only 20 per cent of the government’s targeted reductions in CO2 will actually occur in Ontario, although the government is already claiming credit for the 80 per cent that will happen in Quebec and California. This is a costly and useless pretence and you can be sure the average Ontarian hasn’t yet realized this carbon tax will have no meaningful impact on emissions, let alone global temperatures.
Brown promises that, if elected, his carbon- tax plan would be better because it would be revenue neutral. While, that addresses one of its major flaws, revenue neutrality is not a particularly convincing political slogan, especially when it refers to a cap- and- trade system, which few people understand.
I have a recommendation to deal with the communication problem while combining it with another worthwhile objective. The PC leader can declare that, if elected, he would reduce income and corporate taxes by an amount 20- per- cent greater than what the government collects from selli ng cap- and- trade allowances.
Low- income Ontarians who don’t pay taxes would get a refund instead. The promised tax cut would be attractive, high profile, easy to understand, it would enhance competitiveness and could be affordable in a spending plan with plenty of opportunities to eliminate waste. Besides, lowering taxes should be integral to the PC platform because it creates jobs and economic growth and the province will need it to stay competitive with the coming wave of proposed American tax cuts.
Brown has an opportunity to marry sound policy with att r active politics that respond to the public’s growing frustration with politicians who ignore their day- to- day concerns. Brexit and the U. S. election demonstrate the power of that populist phenomenon. The Ontario PCs would do well to listen to it.
THE PCs ARE DECLINING THE CHANCE TO ATTACK THE LIBERALS ON A VULNERABLE ISSUE.