CARBON TAX GOES NATIONAL, AND SO DOES SQUABBLING

Regions that already had per-unit taxation are now feeling a sense of deja vu, writes

I have to admit that there is an irritating aspect of a federalized carbon tax that I didn’t foresee. If you live in a province that already had per-unit taxation on carbon emissions, you get to watch the whole education process happen all over again. The arguments that you’ve already had in Prince George or Lethbridge with your family, friends and neighbours — now you get to watch those happen, with subtle variations, in Orillia or Dauphin. It is a little bit as though an epidemic you already lived through is breaking out somewhere else.

And, of course, there is one diagnostic sign that dominates all others with this disease. It’s the rebate that the Liberals have built into their carbon-tax plan, imitating existing provincial programs in carbon-tax provinces. The rebate confuses the heck out of people. “If you’re taxing carbon, but giving the money you’ve collected back, what difference will it make to anybody’s behaviour?” Maybe you’ve already heard that question. Maybe you’ve asked it. Some stubborn people make a point of insisting that they will NOT change their behaviour in the face of the tax. “Ha! I’ll just take the rebate and spend it on propane for my outdoor hot tub! Take that, Ottawa fat cats!”

Hot Tub Guy does not know it, but he is demonstrating the whole point — validating the economic virtue — of carbon taxation as a policy approach. The whole point of applying an indiscriminate equal penalty to carbon emissions is to encourage individuals to change their behaviour in the ways most suitable to themselves, according to their values. We are charging Hot Tub Guy a little extra to run his hot tub as an alternative to outlawing hot tubs and creating a stealthy, sadistic National Hot Tub Police Force. Although, come to think of it, I really need to pitch that idea to Netflix before we print this article.

Some Hot Tub Guys may disconnect or dismantle their hot tubs. Some of them may cut back their hot tub usage. And some Hot Tub Guys really love their hot tubs. They would rather forfeit the money and keep their hot tub running through December because they’ll be damned if they are going to cancel the traditional Christmas hot tub party. THAT IS FINE. As a society led by a government, we do not care about your individual hot tub.

The flat rebate to households should not be confusing, but lots of things that should not be confusing are confusing. Hot Tub Guy thinks he is getting away with something by spending the rebate on his hot tub — but, again, the point is to let people make decisions for themselves. The rebate exists because the carbon tax may impose costs for home heating or other fuel-burning activities on poorer people who cannot easily reduce those costs. The idea is that some of these people will already be at an excruciating upper limit when it comes to belt-tightening.

We give everyone a rebate just so that those poorer people will not come out behind. In a way, it is a simple transfer from stubborn Hot Tub Guy to Very Poor Guy. If Hot Tub Guy doesn’t like this idea, he can start looking around for ways to pay less carbon tax. I would suggest maybe having a second look at the hot tub. But you do you.

The truth is that most of us probably have our versions of the hot tub. I know from living in Alberta that the federal backstop version of the carbon tax will make people scream “OH, SO I’M SUPPOSED TO WALK SIX MILESTOWORKAND NOT HEAT MY HOUSE IN FEBRUARY?” It will, in fact, make some politicians scream that. But this is — well, I don’t want to call it deliberate stupidity: let’s say it is a stupid way of expressing more complicated or subtle moral sentiments.

Is there really absolutely nothing you can do, even if you’re quite lower-middleclass, to create energy savings in your life? You never go to the fried chicken place across town instead of the one on the next block? Are you sure you need to own a pickup for one home reno project or a bit of landscaping every three years? Have you even looked into smart thermostats or checked your window seals? Invested in a Snuggie? Taken the old incandescent Christmas lights off the hot tub?

The real problem is that you can’t ask these questions — even hypothetically, or even just to point out that every single household might ask hundreds of them — without sounding like an obnoxious schoolmaster. A carbon tax is social engineering — it is just an optimum, consciously designed, maximally market-friendly way of going about it. Any economist will add the implied caveat that all taxes are social engineering, and other taxes are engineering society in dumb or bad ways. A “carbon tax” is meant, for better or worse, to discourage the emission of free carbon. “Income tax,” which discourages honest work, starts to look pretty ridiculous when you follow the logic just a few inches further. But those are always the hardest inches to cross in the face of a policy novelty.

We give everyone a rebate just so that those poorer people will not come out behind.

COLBY COSH