You can color me unimpressed by the big news today in the Globe and Mail: Quebec just became the first Canadian province to pass a carbon tax. For one thing, the tax is tiny, just 0.8 cents per liter of gasoline, and at comparably low levels on natural gas and diesel. (For non-metricized Americans, that's 3 cents per gallon.) So that makes Quebec's new approach not quite as aggressive as -- to pick just one example at random -- Idaho's 5 cent per gallon increase circa 1996.
Now in fairness to Quebec, the new carbon tax revenue, which weighs in at about $200 million, will be spent on seeking greenhouse gas reductions. That's a big improvement over previous gas taxes in the States, where the money normally gets shoveled back into roads.
Strangely, however, Quebec's government seems intent on preventing the tax from actually influencing consumer behavior. To wit:
Natural Resources Minister Claude Béchard called on the oil companies to be good corporate citizens and do their share to protect the environment by absorbing the cost of the new tax. "We call on their good faith and social responsibility."
Wait, what?
If by some bizarre turn of events the energy companies actually did absorb the full cost, that would mean consumers would receive no price signal whatsoever from the carbon tax, thereby nixing one of the principal reasons why carbon taxes can fight climate change. Presumably, energy demand would stay constant and so would greenhouse gas emissions. (Though I suppose the tax revenue can be put to work.)
I'm going to give the last word to an economic analyst who gets it right:
"Because of the lack of production in the province, refineries will pass the costs on distributors, who will pass them on to consumers," said Andrew Neff, a Washington-based analyst at consultancy Global Insight. "To attempt to address climate change, the costs have to be passed on to the consumer at some point."
Yep.
Two final notes. First, lest readers think I'm Canada-bashing, allow me to officially register my guffaws over the US agreement at the G-8 to "seriously consider" a European proposal to reduce greenhouse gases. Hoo boy, that sure sounds serious.
And last, for the title of this post I apologize to René Magritte and French speakers everywhere.
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Comments
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caniscandida Posted 3:00 pm
07 Jun 2007
In partial defense of politicians in both Canada and the US, supporting a carbon tax with the intention of passing the increased expense on to us consumers, with the ulterior intention of discouraging us from driving (and from heating our homes too, apparently, an especially big deal in Quebec), is going to be difficult for them to do for quite some time. Such a tax will seem unfair to those workers who do not see an alternative to driving, in order for them to go to work or even to do their work (e.g. drivers of taxis or delivery vehicles who must pay for their own fuel). It may also seem unfair to those who live in suburbs and exurbs, who cannot go anywhere without driving (as they believe), e.g. to do such necessary chores as shopping for food -- though in their case, of course, they may be encouraged to make fewer, more economical trips.
This kind of carbon tax will not seem fair, unless and until most people have alternative satisfactory means of transportation, such as decent public transportation, and BioD's fancy-schmancy battery-bike. (The latter, along with most other kinds of bike, would probably not be very tolerable for much of the year in Quebec, save to the heroic type.)
Just to think out loud for a moment, but the carbon tax should have nothing to do with the price of gasoline at the pump. It should be a payroll tax (and at the same time, other payroll taxes should be reduced). It should be levied on those people who choose to drive to work in a standard gasoline-fueled vehicle, even though an alternative means of transportation is available. The distance traveled between residence and work, and the mileage of the vehicle, will determine the rate of taxation.
That will mean extra work for personnel departments to figure all this out, but tough!, this is the time for making some sacrifices, and we should try to do that as fairly as possible.
Hybrid vehicles should be considered an alternative means of transportation.
Carpooling should be considered an alternative means of transportation -- the experts can decide the minimum number of passengers -- , and every metropolitan area should make available to commuters information on carpools from round about. That would probably be more difficult in the more diffuse Western cities, especially Los Angeles, which is anomalously huge and polycentric, but surely it can be done.
So there you are, problem solved. Gee, that was easy!
Chickens are our cousins!
So are other sensitive animals!
Enough is enough!
No more factory farms!
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onkl Posted 10:18 pm
07 Jun 2007
Now, think about lobbying that plan: Sorry Sir, I've got a plan to lower direct tax pressure, increase employment and improve the environment. One might actually raise more fans than just the Green, maybe even a majority.
On the answerring of the question how raising such a tax is best done, I agree with caniscandida on the goals, I do not agree on the means. If you just increase end-user prices (VAT-style), the following will happen:
People with bigger cars pay more tax
People without an alternative mode of home-work transport are punished for their impractical housing decision and have an inventive to move.
People who carpool pay half or less
People who drive hybrid cars pay less (unless it's a Lexus)
And the cost of raising the tax is minimal.
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