The Carbon Tax Debate, Part II
Jul 09, 2008
The last blog took a look at Canada’s poor performance with regard to reducing greenhouse gases and the shortcomings inherent in the notion of a carbon tax. But maybe instead of a carbon tax what should be pursued is a means of getting a dedicated revenue stream from the increasingly obscene profits now being enjoyed by the petrochemical companies. This is the argument put forth by Jim Stanford in the July 9 edition of the Globe and Mail.
The carbon tax just introduced in B.C. amounts to about $10 per tonne of carbon dioxide emissions. The federal Green Party has proposed one in the neighbourhood of five times that. The Liberal plan excludes gasoline.
So in terms of cost to the consumer, any of these taxes would be relatively minor. On an $80 dollar tank of gas, any of these carbon tax proposals would add less than $5 to that total.
But with escalating oil and gasoline prices, what nobody – including government – seems to be discussing is the amount of “tax” we’re now paying to the petroleum companies. Given that the price of gas in Canada has risen by about 50 cents per litre in the last 18 months, this translates to an additional $215 per tonne of carbon dioxide. And the vast majority of that goes to the petroleum industry.
Of course, some would argue that this isn’t really a “tax.” And that high petroleum prices are simply a reflection of supply and demand in the marketplace.
Certainly supply and demand is at play to some degree. But OPEC basically controls the price of oil, and they base this on things like political strife and hedge funds and speculation on the price of oil. In other words, things that aren’t necessarily related to economic fundamentals like supply and demand..
In Canada, we produce about 50 percent more oil than we use. And, save inflation, it’s no more expensive to extract now than it was 18 months ago. Canadians spend about $30 billion more a year on fossil fuels than they did 10 years ago. So why do we continue to pay the same ridiculous prices for our own resources?
One argument for combating this escalation in petroleum industry profits is to introduce a new tax on petroleum producers. This could be fairly modest, say $15 or so a barrel. That money could be then used to fund environmental measures like energy conservation and conversion or support for green technology.
Our provincial and federal governments do get a certain percentage in taxation from gasoline revenue. Unfortunately, it seems that this pretty much goes towards general revenue. What we really need is a means of directing a dedicated revenue stream into programs that will slowly reduce our reliance on an energy source that will not last forever, much as we seem to be in denial about it.
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