Federal Carbon Tax

[FJAG]

As a resident of Ontario I'm going to be effected by the Federal carbon Tax.

While I'm not a climate change denier, I'm a great sceptic of the whole carbon tax/exchange concept. This most recent initiative by the Federal government is leaving me somewhat confused.

As I understand it the Feds will be collecting a carbon tax levied on all the big carbon generators (which in effect is primarily energy producers and manufacturers) which will trickle down their price increases to us consumers. To offset these costs we're all getting a rebate from the government which, theoretically, will make the cost neutral on us consumers.

My question is how does this money traveling in a circle reduce carbon emissions? Being the cynic that I am all I see is a shadow play to make it look like the government is actually doing something about pollution while leaving the ordinary voter with the false impression that it is not costing them anything (or even worse that the government is actually giving them something). In the meantime our industries will be less competitive then they already are against their international competitors who merrily pollute the world while turning out cheap products. (Let's not forget that Ontario became a manufacturing powerhouse because of cheap electrical energy in the 1950s - an advantage which has long since been stripped away by successive stupidity on the part of various Ontario governments)

Am I missing something or is this program really such a superficially shallow shell game?

:stars:

 

[GAP]

Election 2019

 

[ModlrMike]

You're not missing anything. What's missing is the public's realization that there is only one source of tax revenue, and that's the individual. It doesn't matter if you say you're going to tax polluters, corporations or whatever the demon-de-jur is. The costs are passed on down stream to the great unwashed.

This is nothing more than an attempt to bribe us with our own money.

 

[kratz]

CBC.ca

It's important to note, not all Canadians will receive a Carbon Tax rebate if you live in:

...Quebec, Alberta, B.C., Nova Scotia, P.E.I. and Newfoundland and Labrador.

The only provinces not participating with Ottawa's plan are:

...Saskatchewan, Manitoba, Ontario and New Brunswick starting in April 2019, and Yukon and Nunavut as of July 2019.

 

[PuckChaser]

We could cut our emissions by 50% tomorrow, and only lower the global emissions by 0.8%. Microscopic change. We're going to bankrupt Canadian companies and citizens to change global emissions by less than 0.25%.

 

[Xylric]

Charging Canadians a tax like this is completely baffling if you know the slightest bit about ecology, sustainability dynamics (which my sister-in-law has a Master's Degree in), and environmental economics. Because of our absurdly low population density, we live in the planet's biggest carbon sink, since we've got the largest continuous forest on the planet.

We should get it so that other countries pay *us.*

 

[Jarnhamar]

Give someone your money and they promise you'll get a even more money back.

Classic Nigerian Prince stuff right there.


Carbon tax is a scam. Companies that go over the limit just end up paying a small fine. Proceeds from thaf fine are supposedly used to pay for very ambiguous "climate change research" and programs.

Think I'd trust sending money to a Nigerian Prince first.

 

[YZT580]

The EU has had a carbon tax for years now.  Are there any statistics to demonstrate that there has been one scintilla of reduction with the exception of industry loses from plant closures or re-location?

 

[Pusser]

Folks seem to be missing the difference between the new federal carbon tax and the old Ontario cap and trade program.  They're not the same thing. 

Under cap and trade, Ontario companies were capped at how much carbon they could produce with impunity.  If they went over their cap, they would have to pay a fee.  However, smaller carbon producers could trade away (i.e. sell) the unused portion of their caps to larger carbon producers, presumably for less than the fines that would be charged for over-production.  The overall cap would represent an overall reduction in carbon emissions, but it could be spread around so that large carbon producers would not be saddled with the impossible goals that an across the board demand for reduction would entail.  Sounds nice in theory, but cap and trade has been widely criticized for being ineffective.  What makes it really silly is that it was not limited to Ontario.  Ontario companies could (and apparently did) actually buy carbon credits from companies in California.  As I see it, this system doesn't actually encourage companies to develop technologies to reduce emissions.  They can simply buy their way out of it.

If I understand it correctly, the new federal carbon tax is an across the board tax on carbon production.  If you produce a lot, you'll pay a lot.  This would be an actual incentive to reduce emissions if you want to keep your costs down.  Of course, there is only one taxpayer and these increased taxes will be passed onto the consumer.  In order to offset, the federal government will be giving rebates to individuals.  This is a key point.  The companies are not getting the rebates, individuals are.  In other words, production costs will remain high for carbon producers, encouraging them to reduce emissions, but the effect of them passing the cost onto consumers should be minimal.  At least that's the theory...

 

[Blackadder1916]

CBC.ca

It's important to note, not all Canadians will receive a Carbon Tax rebate if you live in:

...Quebec, Alberta, B.C., Nova Scotia, P.E.I. and Newfoundland and Labrador.

I can't speak to the other provinces, but in Alberta we receive a carbon rebate from the provincial carbon levy program.

https://www.alberta.ca/climate-carbon-pricing.aspx

 

[FJAG]

If I understand it correctly, the new federal carbon tax is an across the board tax on carbon production.  If you produce a lot, you'll pay a lot.  This would be an actual incentive to reduce emissions if you want to keep your costs down.  Of course, there is only one taxpayer and these increased taxes will be passed onto the consumer.  In order to offset, the federal government will be giving rebates to individuals.  This is a key point.  The companies are not getting the rebates, individuals are.  In other words, production costs will remain high for carbon producers, encouraging them to reduce emissions, but the effect of them passing the cost onto consumers should be minimal.  At least that's the theory...

If the company can and does pass on the cost of the tax to the ultimate consumer then what incentive is there for the company to reduce emissions?

The problem is compounded if off-shore products appear in competition with the domestic company's. In a free enterprise system consumers will always gravitate to the least expensive option (assuming quality is comparable). Consumers will generally not "pay" out of their own pockets for something as nebulous as that. I recently booked some flights where I was given an option to a) voluntarily pay the carbon offset for my seat, b) voluntarily pay the carbon offset for the whole flight, or c) pay nothing. Which one do you think I picked?

:cheers:

 

[Pusser]

If the company can and does pass on the cost of the tax to the ultimate consumer then what incentive is there for the company to reduce emissions?


:cheers:

Theoretically, I suppose, it's an incentive to the company because they still have to pay, but the ultimate burden on the taxpayer is removed by the rebate.  Note that I'm not defending this as a viable plan, just explaining it as I understand or perceive the logic.  Whether it works remains to be seen.  Frankly, most taxpayers will likely not see the connection between the $1.50 they pay at the pump and the $600 rebate they see on their income tax returns.

 

[Furniture]

Theoretically, I suppose, it's an incentive to the company because they still have to pay, but the ultimate burden on the taxpayer is removed by the rebate.  Note that I'm not defending this as a viable plan, just explaining it as I understand or perceive the logic.  Whether it works remains to be seen.  Frankly, most taxpayers will likely not see the connection between the $1.50 they pay at the pump and the $600 rebate they see on their income tax returns.

The $600 is better kept in my pocket, and used as I see fit rather than being gifted back to me by the government. The same government that can decide on a whim the $600 per person would make a nice dent in their deficit, or can be better spent buying votes elsewhere or in another way.

It appears to be a way to make it look like they are "doing something" without actually having to do anything. Adding yet more complexity to an already complex tax system is not the way to save anything but CRA jobs.

 

[George Wallace]

:goodpost:

 

[Colin Parkinson]

The $600 is better kept in my pocket, and used as I see fit rather than being gifted back to me by the government. The same government that can decide on a whim the $600 per person would make a nice dent in their deficit, or can be better spent buying votes elsewhere or in another way.

It appears to be a way to make it look like they are "doing something" without actually having to do anything. Adding yet more complexity to an already complex tax system is not the way to save anything CRA jobs.

Is that $600 considered taxable?

 

[George Wallace]

Is that $600 considered taxable?

The $600 would have to have come from your taxable income, and of course taxed once again when you spend it -- Already double taxed. 

 

[Brad Sallows]

>My question is how does this money traveling in a circle reduce carbon emissions?

It follows the general belief that "whatever you tax, you get less of", and the knowledge that there are very few people who are thoroughly rational about economics (few will directly connect the increase and the decrease and conclude they need not change anything).  The expectation is that people will respond to increased costs by reducing consumption; the reduction in emissions by the producers is indirect (less consumption, so less production).  To the extent that people respond by reducing consumption, some of the rebated funds are available for other uses; this is a benefit.  But some of the cost increases will be included in the final price of things like transported goods, and to the extent that people try to control those costs, there will be economic contraction (not a benefit).  And some of the consumption is inelastic - I doubt many people change their home heating habits, or commuting habits.  (I suppose that for most people, time and convenience heavily outweigh cost of fuel.)

I have no idea what to expect how it will all play out, other than I always expect unintended consequences.

 

[Jarnhamar]

Feds say carbon price not exempt from GST despite promise it would be revenue neutral

OTTAWA -- The federal government's impending national carbon price could bring in more than $250 million in GST revenues next year but Ottawa doesn't intend to account for those funds in its rebate program.

https://www.bnnbloomberg.ca/feds-say-carbon-price-not-exempt-from-gst-despite-promise-it-would-be-revenue-neutral-1.1162075

 

[FJAG]

Feds say carbon price not exempt from GST despite promise it would be revenue neutral

OTTAWA -- The federal government's impending national carbon price could bring in more than $250 million in GST revenues next year but Ottawa doesn't intend to account for those funds in its rebate program.

https://www.bnnbloomberg.ca/feds-say-carbon-price-not-exempt-from-gst-despite-promise-it-would-be-revenue-neutral-1.1162075

Anybody out there that still thinks that this whole thing isn't just one big tax-grab?

:deadhorse:

 

[Colin Parkinson]

>My question is how does this money traveling in a circle reduce carbon emissions?

It follows the general belief that "whatever you tax, you get less of", and the knowledge that there are very few people who are thoroughly rational about economics (few will directly connect the increase and the decrease and conclude they need not change anything).  The expectation is that people will respond to increased costs by reducing consumption; the reduction in emissions by the producers is indirect (less consumption, so less production).  To the extent that people respond by reducing consumption, some of the rebated funds are available for other uses; this is a benefit.  But some of the cost increases will be included in the final price of things like transported goods, and to the extent that people try to control those costs, there will be economic contraction (not a benefit).  And some of the consumption is inelastic - I doubt many people change their home heating habits, or commuting habits.  (I suppose that for most people, time and convenience heavily outweigh cost of fuel.)

I have no idea what to expect how it will all play out, other than I always expect unintended consequences.

Time is a major factor for me, driving to work costs me about $5-7 more a day, but saves me at least an hour total on the commute. That hour adds up, plus I can stop along the way and pick up items or even go a round about route and  get those items, something that would add hours to my commute, not minutes. So yes I get punished for valuing time over carbon.