This tax magically cleans the environment at the same time. But not everything is like it has been explained.
The tweet was clear: “Starting today, we’re making big polluters pay, and giving the money right back to Canadians – to keep our communities clean and healthy, and make your life more affordable.” The announcement came directly from Canadian Prime Minister, Justin Trudeau on April 1.
What is the point of this new federal carbon pricing scheme? Or, more importantly from a political perspective, what does Prime Minister Trudeau claim is the point?
The idea is that the carbon tax is a sort of punishment for all the big, bad corporations out there that are thoughtlessly polluting our environment with their nasty emissions.
The tax is then taken from those meanies and given to you, the little guy. It’s like a Robin Hood tax, except there’s an added bonus – it magically cleans the environment at the same time. Who could dispute such an idea?
There’s just one problem. This view is not entirely accurate.
For starters, there is no way to confirm that the money a Canadian household has actually shelled out is equivalent to the amount they’ll get back by claiming the rebate on their taxes.
The tax is going to raise the price of gas by about four cents per liter. What nobody knows is how other emitters and producers are going to respond to these increased costs and to what degree they will pass them off to the consumer.
The plot thickened further following a recent report from the Parliamentary Budget Officer (PBO) on the costs and returns of the carbon tax.
The PBO endorses Trudeau’s broad claim that the tax will leave some people better off. “The net benefits are broadly by income group,” the report notes. “That is, lower-income households will receive larger net transfers than high-income households.”
But they do not address the issue of how this can be proven on a specific, individual level – because it can’t. More to the point, they reveal it’s not the case that the burden will be shouldered by “making big polluters pay.”
They look at all the cash the carbon tax will rake into federal coffers and calculate that “household consumption of energy and non-energy products will generate three-quarters of carbon pricing revenue.”
Where’s the money coming from? It’s coming from the taxpayer.