4 Reasons Why Trudeau's "Carbon Tax" Will Fail In Canada - MTL Blog

4 Reasons Why Trudeau's "Carbon Tax" Will Fail In Canada

As it stands, the carbon tax will fail.

Almost everyone (outside the United States) agrees: radical action to reduce carbon emissions and address climate change is needed within the next ten years.

But disagreements persist regarding the best course of action. 

The Trudeau government in Canada has opted for a "carbon tax," or a levy on polluting substances like gasoline, as a first step toward reaching emissions targets.

While the initiative is admirable, as it stands, this policy is not poised for success in Canada. Below are four reasons why.

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It won't incentivize "greener" travel

According to Global News and a recent Ipsos poll, the tax will not incentivize most Canadians to switch to more environmentally-friendly vehicles or services.

Those findings undermine the core arguments for a carbon tax. If the majority of Canadians accept higher prices for polluting materials, the levy will do nothing to reduce emissions.


It could lead to protests like those in France

The gilets jaunes, "yellow vest," protests that immobilized France this past month were in response to president Emmanuel Macron's own proposed carbon tax.

Thousands of people took part in riots in the streets of Paris, sporting those now-iconic reflective traffic vests and demanding the cancellation of the tax. Groups of demonstrators barricaded streets and vandalized high-end storefronts, bringing activity in the capital to a halt.

Macron eventually had to give in to some of the the prostestors' demands, agreeing to postpone the tax and raise the minimum wage.

Via Photo 134448495 © Christian Jakob - Dreamstime.com

Equally vehement opposition to the tax could also spur protests in Canada. Already, small demonstrations have sprouted across the country mimicking their French counterparts, though with a troubling, nationalist twist.

Those protests may only grow in the coming months, especially in Saskatchewan, Alberta, and Ontario, where politicians and citizens, alike, have spoken out against a carbon tax.

If Canadian protests reach the scale of those in France, it could make progressive environmental policy a liability going into the 2019 federal election. Demonstrations against the carbon tax will poison necessary discussion about pollution and climate change. Canadian politics could further devolve into obstinate camps of carbon tax supporters and resistors, immobilizing environmental policy.

As Canada spends months, even years, debating the carbon tax, the country will approach the deadline to reduce carbon emissions having made no progress at all.

The carbon tax could have the adverse effect of inhibiting further climate action.


The government promises to return the tax as rebates

Trudeau has promised that the money that most Canadians pay through carbon taxes will eventually return to them as rebates, or tax refunds.

In fact, Forbes reports that in some cases, Canadians will receive more in rebates than they will actually pay in taxes. While the average household in Ontario will forfeit an additional $244, they may get up to $300 in return taxes, writes Forbes.

While this refund may be a way for the Trudeau government to sell the tax to the Canadian public, it is self-defeating. The rebates provide even less incentive for Canadians to opt for greener transport.

@justinpjtrudeauembedded via  

Carbon tax revenue might be better spent as investments in green energy and green tech subsidies that might one day make fuel efficient modes of transportation cheaper and more readily available to the public.

In the United States, the Congressional Budget Office (CBO) estimates that a policy that charges $20 to "emit a ton of CO2" and increases that price by 5.6% annually "would raise a total of nearly $1.2 trillion during its first decade." While that impressive sum would be much smaller in Canada, it does give an indication of just how lucrative a carbon tax could be. So many policy proposals once deemed fiscally impossible would suddenly become achievable.

The current Canadian carbon tax scheme, including the rebate system, is inefficient.


Little accompanying investment in public transit and affordable urban housing

If the federal government really wanted to incentivize environmentally responsible transport, it would get serious about investments in public transit and affordable housing. In the end, only an efficient alternative will motivate Canadians to abandon their fuel-guzzling cars.

In Montreal, for example, a severely overburdened public transit system will need a radical intervention to meet demand and encourage commuters to keep their cars out of the inner city. But despite calls for new Pink metro line and several other line extensions, the provincial and federal governments have been reluctant to explore creative transit solutions.

The under-construction Réseau express métropolitain (REM), which will connect the downtown, airport, and suburbs, is a good start but much work still needs to be done.

Elsewhere in Canada, particularly in Toronto and Vancouver, exorbitant housing costs have driven people out of the transit-accessible urban core into peripheral or suburban areas where a car is a necessity.

Affordable housing is too often left out of environmental policy discussions, but transit-oriented residences in urban centres are crucial if the government wants people to reduce their carbon footprint while maintaining access to employment, education, and basic needs.

Instead of refunding the carbon tax as rebates, the government should invest in transit and housing, which will have a greater environmental and socioeconomic impact in the long term.


Conclusion

While a carbon tax in some form is a good, even necessary step toward a nationwide reduction in carbon emissions, it will be ineffective in Canada as an independent policy.

Instead, the carbon tax should be a single, cornerstone measure in a more comprehensive plan for the environment and socioeconomic reform.

While a rebate system will make the carbon tax more equitable, accompanying investment in both housing and transit would have a tremendous effect on both economic mobility and emission reduction. Such investment may also make the levy more popular among the Canadian public and prevent debilitating protests and political divide.

The environment and carbon tax are sure to be the central issues in the upcoming 2019 election campaigns.

Stay tuned.


 

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