Monday, June 30, 2008

If Dion’s carbon tax works, we’ll be cutting emissions … and medicare

Of course everyone now agrees that Dion’s carbon tax won’t get the job done because it doesn’t contain a single target for greenhouse gas emission reductions. Not one.

Even Dion has admitted as much saying "I'm confident we will have significant reductions. I'm not telling you specific numbers because you would not trust me."

But over at PEF, Erin Weir is imagining just what would happen if the carbon tax did work … and the news isn't good if you among the meagre 98.7 per cent of Canadians who actually care about health care, child care, education, drug costs, infrastructure, etc.

Weir concludes that because of Dion's absurd pledge to give back every cent in carbon tax revenue in tax cuts, the net effect of reduced demand for diesel, home heating oil and natural gas will be reduced government revenues:

"Unfortunately, the Liberals have instead committed the revenues to across-the-board tax reductions. Only $400 million in contingency funds, 2.6% of Green Shift revenues, would be potentially available for other purposes.

Nevertheless, it is conceivable that some combination of rising fuel prices, a slowing economy and successful environmental policy will reduce future fossil-fuel consumption by more than 2.6%. If carbon-tax revenues consequently fell, would the Liberals rollback their tax cuts or find another revenue source? "

The other option of course would be spending cuts like we saw in the early 1990s.

In a brilliant piece of politicking, Dion has managed to conjour up with a scheme that will have environmentalists praying it works, and social progressives praying it doesn’t. Er, simplicity itself!

Liberal greats like Lester Pearson and Paul Martin Sr. wouldn't recognize this as Liberalism at all.

But maybe this is what economist Marc Jaccard was predicting when he said Dion’s carbon tax is “going to be messy – really messy.”

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