Monday, June 23, 2008

Dion admits carbon tax “won’t get it done”

If you happened to tune into CBC Radio’s The House this weekend, you no doubt heard Stephane Dion acknowledge that his carbon tax “won’t get it done.”

As has been noted here, of all the reasons Dion’s carbon tax disappoints, there’s only one that matters: It doesn’t contain a single target for greenhouse gas emission reductions. Not one.

Dion admits that his carbon tax may get us nowhere closer to meeting our GHG reduction targets:

KATHLEEN PETTY: What isn't in here is a calculation of what kind of reduction this plan will have on greenhouse-gas emissions. [You] don't have any numbers associated with this plan specifically of what kind of impact it's going to have on cutting greenhouse-gas emissions.

STÉPHANE DION: Yes, two things about that: First thing is all the economists that are expert in the environment came with the conclusion that the tax on carbon will decrease emissions -

PETTY: By how much, though?

DION: They don't agree about the how-much, because it's difficult to know, to be fair with them. We know emissions will go down. What we don't know is at which speed emissions will go down.

Unlike Jack Layton’s plan for a cap-and-trade system that puts a firm cap on emissions and is supported by both Obama and McCain, Dion’s plan is just a gamble. An enormous $15 billion gamble based on all the security of Stéphane Dion’s “we don’t know.”

Going with Dion’s plan instead of Layton’s is tantamount to the same leap of faith involved in allowing a passerby to perform “experimental” brain surgery, while an ambulance sits outside waiting to treat your sprained ankle.

As economist Marc Jaccard says: "This is going to be messy – really messy,"

It’s why former Liberal leader Bill Graham is sounding the alarm bells too.


northwestern_lad said...

Good catch BH

Mark Francis said...

Cap-and-trade is still going to to be implemented under the Liberals. It's in the Carbon Budget document from March 2007, and is referenced as endorsed policy in the Green Shift policy document on page 22.

Tax shifting is not a $15 billion 'gamble' as what is taxed is sent back around in tax deductions and tax credits. If it completely failed -- and it wouldn't -- our loss would be the administrative costs.

As a policy implementation, it is weak as the tax is too low. But it is a start. Whereas cap-and-trade will take longer to set up, especially with America's cap-and-trade further behind (the Democrats are consulting on it), a tax shift policy is far easier to get off the ground.

Sweden had good success with it. Implemented in 1991, the Swedish tax shift is credited with getting carbon emissions below 1990 levels by the year 2000.

When cap-and-trade comes to Canada, the tax shift would remain, which is one reason why the actual tax is not so high. It's a complement to cap-and-trade, not a substitute.

northwestern_lad said...

Mark... the new Green plan says nothing as to when and does not give details as to how it will be done. It's the afterthought of the Liberal plan, plain and simple

Blogging Horse said...

Mark, if Liberals are going to do cap and trade anyway, as you suggest, then why doesn't Dion get behind Jack Layton's plan and start pushing?

Instead the Dion Liberals are wasting time and capital on a woefully complex and expensive $15 billion carbon tax scheme that Dion admits won't get it done.

Geekwad said...

Cap and trade doesn't magically make the uncertainty evaporate. It just moves it. Rather than uncertainty as to how much carbon will be released, we have uncertainty over how much it will cost to release carbon. There are pros and cons to both.

Geekwad said...

You're really whipping this git-r-done thing. We can adjust the tax rate to target any carbon emission level we see fit. But we can't do that accurately without historic data, and the tax level we are starting at is extremely conservative for that and many other reasons.

The Bank of Canada does not know what the effect of adjusting overnight lending rates is going to be, either. It can field some pretty good guesses, but often there is disagreement, and sometimes they even guess wrong. That's economic policy for you -- which is what we are talking about.