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August1991

Canada Federal Carbon Dioxide CO2 Tax

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There is no other feasible solution to limiting Canada's CO2 emissions which are a major source of greenhouse gas emissions.

A regulated solution will just lead to another bureaucratic dance orchestrated from Ottawa. Nor can the federal government pass this ball off to provincial governments. Only a federal tax will work.

Ideally, the feds must impose a tax on anyone who emits CO2 into the atmosphere. The tax should apply at the moment of emission (or as close to that as possible) so that we create the correct incentives to limit them. This would also create an incentive to develop mechanisms for sequestration.

I would suggest two approaches to a carbon tax:

First, start small with the potential to ratchet up the tax according to its effects.

Second, return all carbon tax revenues to the province where the tax was collected. The revenues of the carbon tax could be refunded to the provincial governments or ideally to individuals.

This is the simplest, most cost effective way to deal with this problem.

Offsets are not a solution and risk to become another placebo. (Offsets are the latest stylish buzz word. People as varied as David Suzuki, the Bare Naked Ladies and Lancome's supermodels all employ offsets. This means they give money abroad and then claim that this reduces the CO2 emissions equal to the emissions of their own travel and lifestyle. Offsets are a private version of Kyoto.)

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I tend to agree with the idea, but I think the revenues should be directed towards a cut in the corporate tax rate. I don't think this idea would ever fly though, mostly because people in Alberta who are die-hard oil defenders will frame this as a NEP-2 trying to steal Albertan's money. Ideally, an international carbon-trading scheme like Kyoto would work, but it does not because there is no international government which can implement such a system. Thus, the next best measure would be the carbon tax -- not more regulation.

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I don't think this idea would ever fly though, mostly because people in Alberta who are die-hard oil defenders will frame this as a NEP-2 trying to steal Albertan's money.

If that tax was on consumption and not production, I'd have much less trouble. And there has to be a few years lead time so that industry can adapt before the tax becomes a cost.

I do ask though, what of the retroactive effect of GHG emissions in current production. Will Quebec have to fork over money for all the CO2 released by the millions of destroyed hectares of forest for hydro, calculation on an annual basis for each year that the hydro dam is producing power?

How about destruction of forests (a carbon sink) in BC and Ontario for lumber?

How about CO2 emissions from argiculture?

Most importantly, how about in transportation. Are we ready for $2.00 gas or double the price for airline flights?

This, as with every other Alberta+Ontario to Quebec transfer, will steal our money though apollo. Alberta and Ontario will pay the cost for the rest of the country that enjoys their wealth based on our consumption.

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If that tax was on consumption and not production, I'd have much less trouble. And there has to be a few years lead time so that industry can adapt before the tax becomes a cost.

I do ask though, what of the retroactive effect of GHG emissions in current production. Will Quebec have to fork over money for all the CO2 released by the millions of destroyed hectares of forest for hydro, calculation on an annual basis for each year that the hydro dam is producing power?

How about destruction of forests (a carbon sink) in BC and Ontario for lumber?

How about CO2 emissions from argiculture?

Most importantly, how about in transportation. Are we ready for $2.00 gas or double the price for airline flights?

This, as with every other Alberta+Ontario to Quebec transfer, will steal our money though apollo. Alberta and Ontario will pay the cost for the rest of the country that enjoys their wealth based on our consumption.

If the tax was on consumption and not production, then it would not be nearly as effective because the origin of production would not have any incentive to produce less (or more efficiently), other than a questionable shift in demand. Also, if you put the tax on production, the cost will be passed on all the way to the point of consumption, whereas a tax on consumption leaves the producers free from any cost whatsoever. I disagree with the fact that there would need to be a few years time before the tax could be implemented -- it could likely be implemented immediately with little effect as long as the tax rate was started low enough, with a timetable for ramping it up. Looking at the additional (and ever increasing) cost of construction for many oil firms, I doubt that a minor addition cost to their production would hurt much.

About the lumber -- wood is carbon-neutral, whether it rots on the ground or is cut down and burned, it emits the same amount of CO2. Ontario would likely be dinged as well with the tax, as would BC with their growing oil industry. Quebec likely wouldn't be hurt by a tax, but that is not the point. The revenue from the tax (at least what I propose) would not go to Quebec, so what would be the problem?

You say that gas would shoot up the $2.00/litre -- doubtful. As I've said, putting the tax on consumption rather than production is a bad idea as it does not have a direct effect on the decision to emit less GHG's by firms. The cost would be passed on to consumers, so saying that regions which enjoy their wealth based on consumption would somehow be better off is just plain wrong.

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Second, return all carbon tax revenues to the province where the tax was collected. The revenues of the carbon tax could be refunded to the provincial governments or ideally to individuals.

Technical question: how will recycling this money thru a tax regime help curb environmental emissions? Shouldn't the tax be applied to abatement programs?

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Yes it does seem to be the easiest to implement and therefore most practical solution, if we're talking about real reductions of emissions here and now. But Harpers government rejected it out of hand.

Instead they are talking about "caps" as the alternative (their own and "made in Canada"). Which, under the assumption (real reductions here and now) does not make much sense.

E.g.,

Hard caps: how are they going to be enforced? Would violators have to face real financial responsibility to observe the caps? will caps be universal? what would be the registry system (and how much it would cost)?

If the caps are enforced on the same level as other environmental laws (like pollution), ie. on best effort / educational basis, we won't see any real reductions for a long time to come.

Soft or production based caps (and there's no way of telling how many of Harpers' "caps" would end up in this category): they're fine except they do nothing to achieve the goal (ie. reduction of emissions). Those can continue to grow although at a slower rate.

So I just don't see how the "caps" system could work. Not to say that it'd require another layer of bureaucracy to supervise and manage, that seem to be totaly contrary to the Cons idea of accountable government. But these days, you just can't pin the guys in one spot - they're all over the map (or shall we say, spectrum)?

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A carbon tax based on consumption would be disasterous for the ag sector. the cost to bring us up to say David Suzuki's standards is too high. You would be forcing a lot of guys out of business. And it ends up hurting you guys in the end as the price of food would eventually sky rocket. We ourselves have done a good job in reducing our carbon output as it is.

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A carbon tax based on consumption would be disasterous for the ag sector. the cost to bring us up to say David Suzuki's standards is too high. You would be forcing a lot of guys out of business. And it ends up hurting you guys in the end as the price of food would eventually sky rocket. We ourselves have done a good job in reducing our carbon output as it is.

If you don't want to deal with the consumption issue, then a carbon tax strictly on fossil fuel production is absoutely unacceptable as Alberta would bare the vast majority of the burden. Why should Alberta pay the costs for all of Canadian's pollluting??? Just because we produce it?? So we pay more, produce the stuff... and those that use it face no consequence?

Taxing production won't reduce emissions. If anything, increasing the variable cost sometimes encourages higher production volumes to produce acceptable ROI's for shareholders. We'll see production growth, government revenue growth and shareholder loss all at the same time. Could you imagine a worse scenario?

If your not willing to pay $2.00 a litre for gas, you need not support a carbon tax, because that's the only way it can be implement fairly and with effect.

The Ag sector would have to pay as well, it's not just oil and gas that pollute in Canada. The auto sector would have to slap pollution penalties on all their cars (producing a Hybrid still makes pollution). Your power bill would skyrocket if your province uses coal generators (everyone does right now I believe). Little examples of how devasting this concept would be to our economy.

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A carbon tax would only help those who have the means to avoid it, to do so and it would only cause the suffering upon those who least can afford it. If people are so up for fighting greenhouse gases then let it be out and in the open where we all will see the true costs and the jobs lost or gained etc. Making taxes etc is just hiding the real costs. It we are to fight climate then let the real cost in numbers be shown and no hiding anything.

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A carbon tax based on consumption would be disasterous for the ag sector. the cost to bring us up to say David Suzuki's standards is too high. You would be forcing a lot of guys out of business. And it ends up hurting you guys in the end as the price of food would eventually sky rocket. We ourselves have done a good job in reducing our carbon output as it is.

If you don't want to deal with the consumption issue, then a carbon tax strictly on fossil fuel production is absoutely unacceptable as Alberta would bare the vast majority of the burden. Why should Alberta pay the costs for all of Canadian's pollluting??? Just because we produce it?? So we pay more, produce the stuff... and those that use it face no consequence?

Taxing production won't reduce emissions. If anything, increasing the variable cost sometimes encourages higher production volumes to produce acceptable ROI's for shareholders. We'll see production growth, government revenue growth and shareholder loss all at the same time. Could you imagine a worse scenario?

If your not willing to pay $2.00 a litre for gas, you need not support a carbon tax, because that's the only way it can be implement fairly and with effect.

The Ag sector would have to pay as well, it's not just oil and gas that pollute in Canada. The auto sector would have to slap pollution penalties on all their cars (producing a Hybrid still makes pollution). Your power bill would skyrocket if your province uses coal generators (everyone does right now I believe). Little examples of how devasting this concept would be to our economy.

I don't even want a carbon tax in the first place. If there was one on production, I'd be hooped as well if not worse. 30 grand a year for fuel is quite enough thank you. Plus i'd get charged more for fertilizer either way and chemicals either way. Put that carbon tax idea to bed.

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I don't even want a carbon tax in the first place. If there was one on production, I'd be hooped as well if not worse. 30 grand a year for fuel is quite enough thank you. Plus i'd get charged more for fertilizer either way and chemicals either way. Put that carbon tax idea to bed.

That'd be the most visable change, $2.00 gas the next day. Europeans pay that.

Now, Farmers might get their tax free gas still, exempt from the Carbon Tax as well, but I think that'd be just a little bit ridiculous for me to have to pay for carbon to produce my product and not the farmers, you know what I mean?

So ya, we are in agreement, a carbon tax's implications are far more widely reaching than we think.

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I don't even want a carbon tax in the first place. If there was one on production, I'd be hooped as well if not worse. 30 grand a year for fuel is quite enough thank you. Plus i'd get charged more for fertilizer either way and chemicals either way. Put that carbon tax idea to bed.
How does this sound:

The government announces that tax on gas will be phased in over 5 years that increases the average price to $2.00/liter.

If the international price of oil rises then the tax will be reduced accordingly - the tax is to ensure a minimum price - not generate revenue.

All revenue will be returned to the province where the revenue is collected with no strings attached except the requirement that they cannot use to money in ways that defeats the purpose of the tax.

All industries which require the use of fuel (farming, trucking, taxis, etc) will be entitled to a tax rebate equal to the tax levied. This is a short term measure intended to ensure that the taxes do not bankrupt existing businesses. However, these business will be expected to provide plans for how they will reduce GHGs in other ways to qualify for the rebate.

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I don't even want a carbon tax in the first place. If there was one on production, I'd be hooped as well if not worse. 30 grand a year for fuel is quite enough thank you. Plus i'd get charged more for fertilizer either way and chemicals either way. Put that carbon tax idea to bed.

That'd be the most visable change, $2.00 gas the next day. Europeans pay that.

Now, Farmers might get their tax free gas still, exempt from the Carbon Tax as well, but I think that'd be just a little bit ridiculous for me to have to pay for carbon to produce my product and not the farmers, you know what I mean?

So ya, we are in agreement, a carbon tax's implications are far more widely reaching than we think.

I think they were saying if any guy uses Carbon there should be a tax put on it, I think I'd be getting stung on it and hard as I use a lot of carbon. And your right that would be ridiculous. As far as tax free gas goes, property tax, income tax, and my GST more than picks up the slack there.

All in all Carbon tax is bad news.

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Just to float an idea... how horrible would it be to (roughly) index a carbon tax to the availability of public transit? If you're living in Toronto, Montreal or Vancouver or any of the other big cities, the carbon tax will likely have a desirable effect - to make people use alternate methods of transportation. If you live somewhere that doesn't have public transit though, its basically all pain for no gain.

For certain though, I would earmark a goodly portion of the money for research of the next generation technologies for transportation and energy production.

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There is no other feasible solution to limiting Canada's CO2 emissions which are a major source of greenhouse gas emissions.

A regulated solution will just lead to another bureaucratic dance orchestrated from Ottawa. Nor can the federal government pass this ball off to provincial governments. Only a federal tax will work.

Ideally, the feds must impose a tax on anyone who emits CO2 into the atmosphere. The tax should apply at the moment of emission (or as close to that as possible) so that we create the correct incentives to limit them. This would also create an incentive to develop mechanisms for sequestration.

I would suggest two approaches to a carbon tax:

First, start small with the potential to ratchet up the tax according to its effects.

Second, return all carbon tax revenues to the province where the tax was collected. The revenues of the carbon tax could be refunded to the provincial governments or ideally to individuals.

This is the simplest, most cost effective way to deal with this problem.

Offsets are not a solution and risk to become another placebo. (Offsets are the latest stylish buzz word. People as varied as David Suzuki, the Bare Naked Ladies and Lancome's supermodels all employ offsets. This means they give money abroad and then claim that this reduces the CO2 emissions equal to the emissions of their own travel and lifestyle. Offsets are a private version of Kyoto.)

There is no other way? Really? Why not become a leader in developing technology to combat the problem. A carbon tax won't help the environment, so how is it a solution? Futher, technology could possibly get the US and China on board, which would actually have impact. Canada meeting its targets is fairly insignificant other that providing a leadership role.

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I don't even want a carbon tax in the first place. If there was one on production, I'd be hooped as well if not worse. 30 grand a year for fuel is quite enough thank you. Plus i'd get charged more for fertilizer either way and chemicals either way. Put that carbon tax idea to bed.
How does this sound:

The government announces that tax on gas will be phased in over 5 years that increases the average price to $2.00/liter.

If the international price of oil rises then the tax will be reduced accordingly - the tax is to ensure a minimum price - not generate revenue.

All revenue will be returned to the province where the revenue is collected with no strings attached except the requirement that they cannot use to money in ways that defeats the purpose of the tax.

All industries which require the use of fuel (farming, trucking, taxis, etc) will be entitled to a tax rebate equal to the tax levied. This is a short term measure intended to ensure that the taxes do not bankrupt existing businesses. However, these business will be expected to provide plans for how they will reduce GHGs in other ways to qualify for the rebate.

Diesel already costs an arm and a leg, you can bet your ass I have plans to reduce GHGs as much as possible already in place. Industries that require the use of fuel are the ones the "greenies" are going after like the tar sands and such. The industries do most of the polluting and slapping a tax on some guy for driving his car to get him to drive less is almost futile. It sounds like a mini kyoto. Pissing off the population like that with a sky high tax I don't think is worth the little bit of GHG reduction your plan has. The tory gov't actually had a very good plan before it was ripped apart.

You'd be better off giving the private sector tax incentives to develop cleaner power and stuff like that and cutting from useless gov't programs to cover the cost.

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Just to float an idea... how horrible would it be to (roughly) index a carbon tax to the availability of public transit? If you're living in Toronto, Montreal or Vancouver or any of the other big cities, the carbon tax will likely have a desirable effect - to make people use alternate methods of transportation. If you live somewhere that doesn't have public transit though, its basically all pain for no gain.

For certain though, I would earmark a goodly portion of the money for research of the next generation technologies for transportation and energy production.

Good point, why should rural Canadians who don't have access to public transit subsidize GHG reduction while urban canadians can hop on a bus and get off scott free. The carbon tax idea gets worse all the time.

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The industries do most of the polluting and slapping a tax on some guy for driving his car to get him to drive less is almost futile.
I don't believe that is the case. My understanding is that a significant portion of GHGs are emitted by consumers driving vehicles. More importantly, a lot of the fuel consumed by consumers is for 'lifestyle' reasons. i.e. they don't need an SUV but they like to drive them or they choose to live in a house in the suburbs and commute instead of buying an apartment/townhouse that is closer to work.

If we want to address GHGs we have to go after the consumers.

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The industries do most of the polluting and slapping a tax on some guy for driving his car to get him to drive less is almost futile.
I don't believe that is the case. My understanding is that a significant portion of GHGs are emitted by consumers driving vehicles. More importantly, a lot of the fuel consumed by consumers is for 'lifestyle' reasons. i.e. they don't need an SUV but they like to drive them or they choose to live in a house in the suburbs and commute instead of buying an apartment/townhouse that is closer to work.

If we want to address GHGs we have to go after the consumers.

Which is why V8 truck chassis SUVs aren't selling as well. The more fuel efficient crossovers are selling better. You can go after the consumer but there is better ways at going about it.

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Which is why V8 truck chassis SUVs aren't selling as well. The more fuel efficient crossovers are selling better. You can go after the consumer but there is better ways at going about it.
The market is the _only_ effective way to get consumers to change behavoir. With gas prices today you will have to drive a Toyota Prius 300,000 kms to _break even_ on the additional cost of the vehicle. That means there is no economic incentive to buy those vehicles and a $2000 subsidy is not going to make a difference.

The same issue is true for public transit. Most people will choose to purchase and insure a car for personal reasons. However, once they have sunk the money in to a car the incremental cost of driving to work sometimes less than the cost of taking transit and it is more convenient. Better transit service is not going to change that - higher gases prices will.

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If you don't want to deal with the consumption issue, then a carbon tax strictly on fossil fuel production is absoutely unacceptable as Alberta would bare the vast majority of the burden. Why should Alberta pay the costs for all of Canadian's pollluting??? Just because we produce it?? So we pay more, produce the stuff... and those that use it face no consequence?

How much of that production is going to export? US and China are two biggest economies. If domestic consumption drops, guys in the oil patch would turn around on a dime.

Remember, it's the real reductions we're talking about. Those just won't happen if the biggest GHG producers are left completely off the hook, while everybody else is chipping in their dimes and pennies.

And most certainly, there should be a consumption tax as well, it isn't like one or the other.

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Great. Carbon tax. Nifty idea.

Geoffrey said it clearly. Expect $2.00/liter gasoline. Same with diesel. If anyone places an additional carbon tax on oil and gas producers, all you will see is a pass-through from CAPP and SEPAC. There is nothing illegal about them raising their wholesale fuel prices as high as they would like. Collusion is outlawed, but not the concurrent decision of corporations to increase market price.

When you force a company to become unprofitable, said company will close or move.

Tree-huggers go home. Canada produces approximately 1/3 of 1 percent of the world's GHG. So please don't continue with the platitudes about "reducing" this, and "cutting back" on that. If Canada completely shut down all GHG production, there would still be 99 2/3% of existing production worldwide.

Try and shut my nation of Alberta down over such a ridiculously miniscule target, and you'll see seperation. And about damn time.

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No, really. Everybody should just sit on their collective ar..es pointing fingers at everybody else. That's the way to go. Real and made at home solution to all problems including separation.

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Try and shut my nation of Alberta down over such a ridiculously miniscule target, and you'll see seperation. And about damn time.

I think shutting down the oil sands would definitely strengthen the seperation movement in Alberta. Only so many people will lose their jobs at Ottawa's hands before they get pissed off.

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