author: ethan williams | contributor
Does a carbon tax hurt the economy?
The Trudeau government’s recently proposed carbon tax is an issue causing lots of controversy in Canada right now, and it especially seems to be hitting home in Saskatchewan. Since it was first announced, many in the provincial government, oil, and construction industry have been up in arms, claiming that Trudeau’s plans will dampen business opportunities. However, others say it’s high time the tax took effect and climate change be front and centre.
Ralph Goodale is the MP for Regina-Wascana, and says that the government is proposing carbon pricing, which would not necessarily constitute a tax, but rather other ways to have provinces pay for their share of greenhouse gas emissions.
“There are various techniques for achieving [carbon pricing]. A carbon tax would be one of them, and a cap and trade system would be another. Some provinces are doing a combination of both.”
According to the Environmental Defense Fund, a cap and trade system means that a limit is placed on emissions that a province can output, while trade indicates that companies who limit their emissions will pay less. Although he mentions that these are options the government is considering, Goodale also cites one Canadian province for having a solution to carbon pricing.
“British Columbia is probably the furthest advanced. They have had a form of carbon pricing in place for the last 10 years. It’s interesting to note that over that period of time they have enjoyed one of the strongest economies in the country, with the best record of performance in dealing with greenhouse gasses.”
Goodale says the pricing includes a five-year phase-in period in which the price would be set at ten dollars per tonne of emissions. It would increase ten dollars each year afterward until being reviewed at the end of the five-year period.
However, back at home, the provincial government doesn’t seem too keen on the idea. Scott Moe, Minister of Environment, mentions that the pricing would have multiple effects on many people.
“A unilaterally imposed federal carbon tax would impact our economy on household income, and on jobs ultimately.”
Moe says that the cost of imposing a tax would be approximately two-and-a-half billion dollars.
“We’re an exporting economy, whether it be agriculture, mining, or our energy sector. That tax will create carbon leakage in this economy and make our businesses uncompetitive on the world stage.”
He says that the government would be very concerned if the plans for the tax were followed through.
“What concerns us is the impact it will have on the economy, and the marginal impact it will have on climate change.”
But Goodale has a different view in terms of the impact on Saskatchewan families. He thinks the revenue from the tax would greatly benefit the economy here at home.
“All of the revenue [from the tax] would remain within the province. The premier has estimated that after the five-year phase in period, the amount of revenue raised in Saskatchewan would be about $2.5 billion. When you look at what that would allow Saskatchewan to do, it’s really quite impressive. Saskatchewan could afford to entirely eliminate its provincial personal income tax, and it could also afford to substantially reduce, if not eliminate, property taxes.”
Another outspoken critic against the tax is Premier Brad Wall. Wall spoke to guests at the State of the Province Address on Oct. 18, saying that climate change is a concern of the government and that they have looked at numerous ways of trying to address it, though two options stuck out for him.
The first was taxation, similar to that of a carbon tax, although Wall immediately rejected that decision. He says that the only other option was to explore innovation in technology that could advance cleaner energy options instead, which was a statement that Moe echoed.
“What we feel will be a benefit, not just to Saskatchewan or Canada but the world potentially, is the effort around technological solutions, such as carbon capture and storage. There’s an opportunity for technology to address climate change without a great impact on the economy,” stated Moe.
Goodale also acknowledged this, saying the Government of Canada would be willing and open to exploring the idea of technology.
“Climate change is obviously a very serious and urgent problem, and in order to deal with it we are going to undoubtedly need major investments in new technology. When you get into the possibilities of what might be done, the Government of Canada has a two-billion-dollar fund for investing in new technologies and there are a whole range of things that Saskatchewan could become a world leader in with that support from the federal government.”
In the meantime, the debate will continue to wage on about this issue. If implemented, the pricing system would take effect in 2018 and would be reviewed in 2023.