Your carbon tax questions answered
The wonderful Tom Price asked questions about the federal government's carbon fee and dividend system (‘Many questions about the carbon tax,' April 23). He could have answered most by reading the legislation, but let me go though them.
1) Is the carbon tax applied to all users of carbon for producing energy? Thermal plants count as large emitters. They don't pay on all emissions, which keeps electricity costs down and doesn't drive the plants out of business.
2) Why is the tax not applied at the source instead of at the consumer level? The tax is collected from fuels suppliers in each province, which is as close to source as we can get. It is a bit hard to tax Saudi or American producers at source. Also, the sources of Ontario fuels are not Ontario. The tax is not imposed directly on the consumers, as Tom suggests, however. Suppliers pass it on to consumers.
3)Is the tax being applied to exported carbon fuels, as well? No. Canadians don't burn that fuel. This lets Canadian oil producers compete with American producers.
4) Are taxes being added to electric car owners to pay their share of the roads cost, while not paying road taxes on their energy source? No. This is a bit of a problem. But fuel taxes pay a declining part of road costs, as ICEs get more efficient. Most of the cost is shoved onto property and income taxes, which electric vehicles owners do pay. We need to develop a sensible road pricing system.
Will electric car owners be taxed on their energy consumption to pay for distribution costs? Obviously, if electric vehicle owners buy electricity, they are sharing these costs
How will the electric car owners know how much of their energy is being generated by thermal plants and therefore taxed, versus other sources? Eight per cent of Ontario's electricity comes from thermal plants, mostly at peak times when electrics are not charging. These plants are subject to the tax and will eventually be phased out
7) How will additional electric energy generation requirement be funded? By electric car users or by the general population? This is an issue for Ontario Hydro, but the province spreads most costs over all users, as it should. Electric vehicles will not be a major draw on the system for quite a while and tend to draw power off-peak when we have a surplus.
8) Will the rebate cover only a portion of the pump cost or will it also include compensation for the increased cost of consumer goods? Most consumers will get more back than their total costs. You heard the Auditor General, Tom.
9) What carbon tax will be applied to the construction of special events, such as the Olympics? Are you asking for additional charges for special events, Tom? Or do you think there will be special exemptions?
10) Will the carbon tax that gets applied to those construction projects be in accordance with World Bank calculations or has a different formula been developed? The tax is applied to inputs to all construction. Concrete producers are among the large emitters taxed at the margin rather than on all emissions, and this is a problem for properly pricing construction, although it does support jobs and keep construction costs down.
11) Will the rebate on those taxes be rebated only to attendees at the event or go into general revenues? There is no specific special tax planned, so there in no need to talk about where these imaginary special revenues go.
12) What are the real time benefits and how can I access those calculations to review them? There is lots of literature in this area.
Canada is starting with a very small tax that will have a small effect initially. Do you mean the immediate effect of the small tax or the effect of a long-run strategy to gradually raise the tax and take a host of other actions? Do you mean the benefits as narrow as gasoline revenues or as wide as staving off the million extinctions that the UN predicts? Could you clarify your question a bit?