We get rebates for carbon tax

Re: Letter, We're not naïve about carbon taxes, March 19.

This letter-writer fails to understand the basics of Economics

101 and Behavioural Economics.

Under the first concept, if you want to reduce the demand on a certain product, you raise the price — and if you want to encourage the demand to go to another product, you reduce the price. In the case of carbon taxes, the free-market route is to indeed increase the price of fossil fuels.

In Canada, the government decided to then take the money received and give it back — but at a different time, thus dissociating the taking of the monies and the giving back of these monies. This is where Behaviour Economics kicks in: “Ouch, the price of gas has gone up” and then later “Oh what do I do with this extra money?”

In this case, it may be that a person has no choice but to put it right back into purchasing gas. However, in most cases, people can use the money to purchase cheaper and/or alternate products.

The trouble is that quite a lot of people do not even know that they are getting a rebate and secondly, they appear to be unable to connect the dots between the pricing of pollution (carbon tax) and the use of the rebate to shift to another product. The government has, from the very beginning, done a poor job in creating a convincing and informative communication package so that the population can better understand these concepts.

Finally, the so-called carbon tax is only one of more than 50 strategies being employed to fight climate change in Canada. It nevertheless is a good free-market solution but it certainly has attracted a huge and outsized negative reaction, mainly because of the word “tax.” Maybe it should have been called the “cost of polluting.”

J. Ted Legg, Almonte