Is it Time For a Carbon Tax?
Feb 25, 2008
As Dan Lett observed in the Winnipeg Free Press recently, it wasn’t all that long ago that the notion of gasoline prices crossing the one dollar per litre threshold sent a shudder up the backs of Manitobans and was expected to cause everyone to head to their nearest gas station to refill before prices went up.
But now that we’ve been beyond that point for a while it seems that Manitobans are over the sticker shock and are comfortable paying approximately $1.10 per litre for gasoline. Yet it seems to have had no impact on our driving behavior at all – we still drive to work every day, one-person per car, as if nothing’s changed. So is there a threshold that would alter our behaviour? And if so, where is it? $1.25 per litre? $1.50?
So if rising prices at the pump won’t alter consumer behavior, that leaves government incentives. And a few provinces have introduced new measures recently. British Columbia and Quebec have both brought in carbon taxes on gasoline, diesel, coal, propane and natural gas.
The idea behind taxing these energy sources is that they would provide incentives for households and businesses to reduce their use of the most carbon-intensive fuels and to switch to less carbon-intensive ones. By using these dividends to reduce other taxes on ‘productive’ activities such as personal and corporate income tax, society would achieve a cleaner environment while also improving incentives for ‘productive’ work and business activities. This could serve as a type of stimulus for the economy. Perhaps a better option would see the revenues gained from such a tax applied to such things as public transit or infrastructure.
B.C. has introduced a tax of $10 per tonne of carbon-equivalent emissions that will reach $30 per tonne in 2012. This translates into an increase in the price of gasoline by seven cents per litre over the next three years. Designed to be revenue neutral, the tax will be used to cut income, small business and corporate taxes. Well intentioned certainly, but using a fossil fuel tax to subsidize business doesn’t seem all that progressive.
Quebec’s approach with regard to the revenue differs from the B.C. tax, however. While their tax will amount to about 0.8 cents per litre of gas sold in Quebec, the monies collected (estimated to be approximately $200 million annually) will be used to pay for energy-saving initiatives such as improvements to public transit.
The problem with either approach is that lower-income families with older, less fuel-efficient vehicles will be the most affected by a new tax.
So, is there a better approach? Perhaps one which won’t harm those that can least afford to pay such a tax?
So far the Province of Manitoba seems to have no plans to consider a carbon tax of its own. Whatever the approach taken, we need to take a serious look at ways of making Manitobans aware of the consequences of continued over-reliance on fossil fuels. How we do this is the big question.
Comments
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If you don't like gas prices, drive less and get a car that uses less fuel. Drive a little slower. I can't believe they are raising the speed limit to 110 KPH ..... that will not help gas prices and more than likely increase the amount of people getting hurt or killed.
jimcotton - 2008-02-28 17:37
Another approach in reducing carbons is to pressure companies to invest in the transit EcoPass for their employees. The transit tax credit is also another green initiative that encourages people to take the bus. Another approach is to have special lanes for people that carpool. Maybe a tax would help, but I think we are already taxed enough...
Al - 2008-03-11 11:06