Carbon tax is better than cap and trade

Re Changing a regime for change’s sake, Cohn,

Dec. 12 Martin Regg Cohn dismisses Conservative Leader Patrick Brown’s carbon plan as “change for the sake of change.” In fact, much like the Liberal government’s green-energy fiasco, we should be cutting our losses before more damage is done.

Before the Liberal cap and trade plan becomes yet another expensive boondoggle, we would be wise to objectively review what’s gone on in Europe. The aptly named European Trading Scheme (ETS) has been active for 12 years and is now undergoing serious reform — an acknowledgement of its failure to have any meaningful effect on reducing CO2 emissions. It remains to be seen if the reforms will have the desired impact.

Cap and trade is so complex that it’s virtually impossible to grasp the complete picture and, not surprisingly, it’s easy to get it wrong. If the cap is not high enough, it becomes a bureaucratic process that accomplishes nothing. If too many carbon credits are on the market, the price of these allowances plummets and companies lose the incentive to reduce emissions. This was one of the primary factors in the failure of the ETS.

The worst element of cap and trade might be the direction of all revenues into so-called “green” projects. These are projects that should be funded through responsible prioritization of tax revenues — but instead, they’ll be used to buy votes with more government programs — creating a sleight-of-hand fiscal imbalance. The complexity of the cap and trade market — as already demonstrated in Europe — is ripe for manipulation, if not outright corruption.

Brown proposes a revenue-neutral carbon tax. If a carbon tax is not revenue neutral, it’s a tax grab. If the revenues don’t go back to the people, it’s a tax grab. If the tax is not visible, it will not do the job that’s intended: to curb the use of emission-laden products. If lower-income people don’t get more of the refund, it will be unfair.

If we must have a carbon tax, Brown’s approach is a far more transparent and equitable alternative. Don Mustill, Niagara-on-the-Lake