Car­bon tax in­evitable, like it or not

No way to ‘opt out’ of what’s not in their purview

Ottawa Citizen - - POLITICS - An­drew Coyne Com­ment

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.

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