Trudeau’s new carbon tax is a can’t-lose gambit
Justin Trudeau effectively kicked off the 2019 federal election campaign Tuesday with a you-can’t-lose carbon tax pledge to voters in Ontario.
Whether the prime minister’s socalled federal government backstop plan will sufficiently reduce climatealtering greenhouse gas emissions is another question. But at least we now know how the governing Liberals hope to frame next October’s federal election.
As Trudeau explained in a CBC Radio interview Tuesday, he plans to take on the “Conservative movement” of Ontario Premier Doug Ford and federal Tory Leader Andrew Scheer by instituting a combination of carbon taxes and rebates that will somehow end up leaving more money in the hands of average families than it removes.
It’s not exactly a sleight of hand. But it’s close.
The political problem facing the Liberals is that their signature promise of 2015 — fighting climate change through imposition of a price on carbon — is in danger of coming undone.
Saskatchewan was never on side. Now it has been joined by Ontario, Manitoba and New Brunswick.
The recalcitrant provinces have been unable or unwilling to come up with their own carbon tax plans. And so Ottawa has responded, as it said it would, by imposing its own tax on the foursome.
On Tuesday, in Toronto, Trudeau explained how the new tax would work.
First, it won’t be called a tax. It will be labelled instead a “price on pollution.”
Second, it will be offset by plenty of goodies.
Big emitters like cement and fertilizer producers that face international competition will be given a special break. So, too, will greenhouse operators.
Farmers and fishermen will be completely exempted from the tax, as will those living in remote communities who depend on diesel-fired electricity generation.
Everyone else will face a higher tax on fuel, including gasoline, natural gas and home heating oil.
Ontarians will pay four cents a litre more for gasoline next year, rising to 11 cents by 2022. Those who heat their homes with light fuel oil will see the price rise by five cents a litre next year, rising to 13 cents by 2022.
Yet, miraculously, most will get all of this money back, in some cases even before they spend it. That’s because Ottawa will mail out rebates (called “incentive payments” by the Liberals) to anyone in the four hold-out provinces who files an income tax return.
In Ontario, the feds reckon, an average household will spend $244 more on fuel but get $300 back in rebates. Residents who live in small and rural communities will get 10 per cent more.
Oh, yes. As well, 10 per cent of the carbon tax revenue raised will go to universities, hospitals, schools and small businesses to help them adapt.
In short, the Liberals say, it’s a great deal. A tax to fight climate change is levied. But almost no one pays it. In fact (in the first year, at least) most Ontarians get more back from the new tax than they pay.
Take that, Doug Ford. Eat your heart out, Andrew Scheer.
As with most miracles, however, there are problems. One is that, for the arithmetic to work out, someone has to pay. The government doesn’t say who that will be. But it’s a good bet that the politically important constituency of suburban commuters will be net losers.
Another is that it’s not clear how effective the proposed combination of taxes and subsidies will be in creating incentives for people to use less energy. Would you drive less if you knew you’d receive a cheque to cover any extra fuel costs incurred?
Finally, there’s the real problem: Even with a fully functioning carbon tax, the Liberal government is nowhere near meeting the targets it set for itself in the 2015 climate summit.
Politically, Trudeau’s everybody-wins carbon tax may end up spiking the guns of his Conservative adversaries. But will it address climate change in any real way? I’m not sure it will.
The political problem facing the Liberals is that their signature promise of 2015 is in danger of coming undone