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August1991

Canada Federal Carbon Dioxide CO2 Tax

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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.

I am no economist, but won't higher gas prices like that bring on more inflation? Bring on the bio-fuel program, geothermal heating, maybe close downtown city areas to cars, more fuel efficient cars, smaller cars, private companies into developing "greener" powers. Also by upping the tax, it isn't going to make that much of a difference, just people are going to not have as much money, the economy takes a little hit, and people will still be driving. Why not do the smart thing and keep money in our pockets.

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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.

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

A tax is really going to shut down the oil fields in Alberta...your nation? really...didnt think that could happen. Oh boy....come on.

A tax on the producer as pointed out by myata means the exports get dinged too. Otherwise then only the CDN end user pays a tax.

Separation....what the hell does that nonsense mean. Laughable really...life that tough in Alberta these days?Going to take your oil field and go home?Thats what it sounds like.

What is Canada now, 3 distinct parts.....All of Canada , Quebec and Alberta?.

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The oil sands operate on very narrow profit margins in low commodity price times. A 5% reduction in the profitability of the oil sands would destroy any incentive to invest.

That's the fire your playing with. You can't shut down the oil industry and have the same standard of living that you have today, no matter where you live in Canada.

Alberta becoming a have-not reduces the Federal transfer program to other provinces by about $12b-15 a year, excluding all the personal income tax and corporate income tax revenues lost on top of that to Ottawa.

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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.

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

A tax is really going to shut down the oil fields in Alberta...your nation? really...didnt think that could happen. Oh boy....come on.

A tax on the producer as pointed out by myata means the exports get dinged too. Otherwise then only the CDN end user pays a tax.

Separation....what the hell does that nonsense mean. Laughable really...life that tough in Alberta these days?Going to take your oil field and go home?Thats what it sounds like.

What is Canada now, 3 distinct parts.....All of Canada , Quebec and Alberta?.

I'd say 6 parts, Vancouver-Vancouver Island, West of Winnipeg to the BC interior, Ontario, Quebec, the Maritimes, and the North.

I'm sure you don't want to pay 2 bucks a litre for gas if you don't have to.

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The oil sands operate on very narrow profit margins in low commodity price times. A 5% reduction in the profitability of the oil sands would destroy any incentive to invest.

Fair enough, are these low commodity times?

The oilsands weren't profitable for many many years , and I go back to the early 70's when my father was doing some work for them. Meaning the oilsands are not going anywhere, when prices rise then its time to haul it out.

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I'm sure you don't want to pay 2 bucks a litre for gas if you don't have to.

Nowhere have I seen a proposal for $1.10 a litre tax, so where does the $2 come from?

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I'm sure you don't want to pay 2 bucks a litre for gas if you don't have to.

Nowhere have I seen a proposal for $1.10 a litre tax, so where does the $2 come from?

Somebody was saying that gas should be $2 earlier in the thread.

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The oil sands operate on very narrow profit margins in low commodity price times. A 5% reduction in the profitability of the oil sands would destroy any incentive to invest.

That's the fire your playing with. You can't shut down the oil industry and have the same standard of living that you have today, no matter where you live in Canada.

Well we have to honest with ourselves at least at some point. The whole point of the exercise was to make both industry and consumers aware of the cost of managing GHG. The cost which until now was born by the society as a whole. Businesses that operate below cost would have to go down, as per the basics of economy. Those that adjust their cost structure, will survive and become stronger.

Sure, there can (and will be) bridge programs, grants and so on to ease the pain of the transition. But it can't happen without assigning real money cost to the emissions - of course, if we want to have real reductions anytime soon. Not in 2050 and on paper.

Of course, much better solution would be to talk them emissions into reductions without having to do anything. Or maybe get everybody else to reduce their stuff twice as much so that we could go on pumping gold, carefree?

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Now, I agree that the oil sands need to make some steps in improving their environmental sustainability. But taxing them for producing the fuels the rest of Canada upgrades into products is unacceptable.

Eastern companies that get their fuel from Hugo Chavez or Norway/North Sea wouldn't have to worry about paying anything.

Bit of trouble there.

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Agreed, in general. Canadian companies should not be unfairly taxed versus foreign competition.

That's just one of the reasons why an international solution is needed. Which seem to be escaping Harper so far.

One way could be through good old import / export duties / subsidies, but it could quickly become too messy. A better one (which would require some sort of international accord) is when a buyer (importer) pays environmental surcharge to offset the carbon tax born by the producer. Sort of like carbon VAT.

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"A tax is going to shut down Alberta?"

Guyser, let's get this straight. All people have priorities, it's natural. Right now, the environment is the new black. But take that same person and put him in a position where he has to choose between his money going to save 1/3 of 1% of the world's GHG emissions, and his money going to more doctors when little Johnny gets sick. No brainer. He'll say "screw the environment". The same principle applies when you jepardize someone's livelyhood, and he can't buy little Johnny a Christmas present because he lost his job due to cutbacks. When people talk about carbon taxes on Alberta, they rarely understand the impact it would have on the province...and let's not get into the NEP talk, let's look at the reality. A vast majority of the jobs in Alberta are directly related to O&G and it's spinoffs. Take that money and employment out of the economy, and little Johnny gets nothing. That is when you will see the "I'm all for doing everything to protect the environment" crowd change their tune to "screw the environment, screw the federal government, screw the ROC".

How would you react if the government, an environmental cartel, and I decided that the company you work for will be taxed to the point that they will lay you off? Are you prepared to say "it's okay, it's helping the environment"? If you think you would say that, then A) You smoke waaaay too much drugs or B) you've never had any bills and committments.

As for seperation, if the aforementioned situation were to happen you would see the Kwebek-West thing happen in a hell of a hurry. People are willing to stay in Canada so long as it doesn't negatively affect their quality of life. Once it does, the rah-rah-flag-waving crowd will sing a different tune. As Charles Anthony so often puts it, "It's always about the money."

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Somebody was saying that gas should be $2 earlier in the thread.

Oh...must have missed that one. Thanks.

That's what it is in Europe and their car emissions are still high, so it's go to be at least $2, if not $3 or $4 before people drive less. They drive less in Europe, but it's more cultural and they have the ability to take alternative means more so than we do in North America.

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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?

Several posters raise good points in this thread. Let me start here.

First, any tax revenue would ideally be refunded to individuals in the province where it was collected or to the provincial government. A carbon tax would be tax-neutral and region-neutral. There is no question that this be another NEP.

In the Albertan context, a carbon tax should be seen as a provincial royalty on the use of the environment. The "royalty rate" or size of the carbon tax would be set by Ottawa but collected provincially and then possibly refunded the way Alaska refunds its oil royalties or the way Klein did it - a cheque to everyone.

Second, the point here is not to raise government revenue (although in a future world, I think governments would be wise to depend exclusively on environmental "rents"). The purpose is to charge people for the use of the environment.

All of the good things - carbon dioxide sequestration, new engine technologies, better heating systems, more efficient use of electricity, changes to electricity pricing - all will follow from a carbon dioxide emission tax. It is hard to know where best to put our efforts or what new technologies will work best. Bureaucrats can't decide these things, nor should they try.

People respond to incentives (or at least, they try to avoid taxes) and the trick is to set the incentive accurately. You can evade the CO2 tax by not putting CO2 into the atmosphere. IOW, tax evasion would become an environmentally friendly act.

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In the Albertan context, a carbon tax should be seen as a provincial royalty on the use of the environment. The "royalty rate" or size of the carbon tax would be set by Ottawa but collected provincially and then possibly refunded the way Alaska refunds its oil royalties or the way Klein did it - a cheque to everyone.

Impossible within our constitution. While I would like to see more reasonable royalties in Alberta, Ottawa need not be involved. We are already reviewing them.

92A. (1) In each province, the legislature may exclusively make laws in relation to

( a ) exploration for non-renewable natural resources in the province;

( b ) development, conservation and management of non-renewable natural resources and forestry resources in the province, including laws in relation to the rate of primary production therefrom; and

( c ) development, conservation and management of sites and facilities in the province for the generation and production of electrical energy.

A Federally imposed royalty or charge directly on oil extraction would be unconstitutional even if collected in the province (Alberta could simply refuse to collect I suppose, what would Ottawa do then?).

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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?

It wouldn't really make a difference. If you tax the producer, the prices go up, and the consumer pays. Basic economics.

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.

Any carbon tax would end up going to the government giving them more money. Assuming that spending does not increase, that money would be returned through reduction of other forms of taxes. We are not talking about a tax raise/new tax, we are talking about a different tax. A person may spend an extra few bucks at the pump, but their paycheque will be a few bucks more as well to pay for the difference in cost.

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.

See above.

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Any carbon tax would end up going to the government giving them more money. Assuming that spending does not increase, that money would be returned through reduction of other forms of taxes. We are not talking about a tax raise/new tax, we are talking about a different tax. A person may spend an extra few bucks at the pump, but their paycheque will be a few bucks more as well to pay for the difference in cost.

Point #1) Governments rarely transfer tax burdens like that, we'd all pay more and we all know it.

Point #2) If the money is returned like that, what disincentive do I have to buy gas? If I have the difference in gas prices in increased income, why would I buy less gas?

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Point #1) Governments rarely transfer tax burdens like that, we'd all pay more and we all know it.

I believe it was you (though I may be wrong) who said that it's government spending that is important, and that make sense. As long as government spending does not increase, that money would have to either go towards paying the debt or returned to taxpayers (or I suppose printing less money = less inflation).

Point #2) If the money is returned like that, what disincentive do I have to buy gas? If I have the difference in gas prices in increased income, why would I buy less gas?

If you spend all of your tax cuts on gasoline, then you would end up neutral. However, if you buy less gas (because it's more expensive) AND you get a tax cut, then you would be better off. More money in your pocket, that's a pretty good incentive to buy less gasoline and therefore pollute less.

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If you spend all of your tax cuts on gasoline, then you would end up neutral. However, if you buy less gas (because it's more expensive) AND you get a tax cut, then you would be better off. More money in your pocket, that's a pretty good incentive to buy less gasoline and therefore pollute less.

I'd have more money in my pocket if I didn't buy as much gas today...

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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.

You guys in Quebec are so concerned about CO2 emissions maybe you should separate and pay your own way in life. Then you can talk about spending your own money on destroying your own economy, instead of spending the money of Canadians whose jobs provide the subsidies that keep you out of bankruptcy court.

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A tax is really going to shut down the oil fields in Alberta...your nation? really...didnt think that could happen. Oh boy....come on.

A tax on the producer as pointed out by myata means the exports get dinged too. Otherwise then only the CDN end user pays a tax.

So like, the Americans are going to pay an extra tax on our gasoline, when they can get gasoline from the rest of the world for less? Sure. That's gonna happen.

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I'd have more money in my pocket if I didn't buy as much gas today...

And you'd have even more with a carbon tax...

Ah, another tax puts more money in your pocket? Ya right. How is increasing the cost of everything that involves the use of oil and gas in its production and transportation going to put more money in your pocket? Where is all this tax money going to go. I am always nervous of people who's simplistic answer to everything is transferring ever more money to government.

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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.

You guys in Quebec are so concerned about CO2 emissions maybe you should separate and pay your own way in life. Then you can talk about spending your own money on destroying your own economy, instead of spending the money of Canadians whose jobs provide the subsidies that keep you out of bankruptcy court.

Pollution is harmful and like other destructive activities, such as theft and smoking where people underestimate the harm done and are thus unwilling to stop engaging in, there have to be financial or other penalties to curb said behaviour. Separating doesn't work because you can't separate the atmosphere and the environment, so you can nix this nonsense. Pollution isn't free (of no consequence) and if your activities produce pollution, then you should do whatever is possible to minimize it. When you aren't reasonable enough to do it voluntarily, you need financial incentives or disincentives to do it. It's that simple and the free ride is over.

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