Your car­bon tax ques­tions an­swered

The Sudbury Star - - OPINION - DAVID ROBIN­SON David Robin­son is a Lau­ren­tian Univer­sity eco­nom­ics pro­fes­sor.

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.

5)

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

6)

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?

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