Across North America, the tide seems to be turning against carbon taxes - this perception might be why
Justin Trudeau’s carbon tax isn’t about climate change; it’s about changing the narrative on his four years of deficit spending.
Bluntly, the Trudeau government needs more tax money after years of senseless spending and wasteful management of the economy.
In April 2018, the parliamentary budget office projected a much higher (more than $4 billion) deficit for 2018-19 than claimed by the Liberal government.
Since then, things have worsened. After bungling the Kinder Morgan pipeline project, the Liberals decided to spend $4.5 billion to buy it. More money is being spent to “correct” earlier failures on consultation on the environment and with First Nations.
Why is the Prime Minister imposing carbon tax? According to him, Canadians gave him a mandate to impose it in 2015. He is trying to fulfil this mandate in the final year of his government.
General elections are almost never about one specific issue. Voter decisions are impacted by a complex set of issues, negative or positive images of incumbents, and the influence of unconscious thought-processes, emotions and prejudices. It’s very rare when one issue dominates an election like free trade in 1988.
It would be hard for even the most ardent Liberal to claim that the 2015 election was solely about a carbon tax. In fact, the last time the carbon tax was a significant campaign issue, the Liberals lost.
In 2008, Stephane Dion’s ‘Green Shift’ initiative promised an $11 billion reduction in personal taxes to balance the cost of a carbon tax to Canadians. Voters didn’t buy Dion’s argument back then, and they are not going to buy Trudeau’s argument now that he will return more money to taxpayers than the tax will cost them.
If the Prime Minister clearly believes that Canadians are in favour of a carbon tax, he should follow Dion’s example and make it a central plan of his next election manifesto.
It’s strange logic that government will collect the carbon tax and then return the money to Canadians with heavy administrative costs.
Have Canadians ever seen a government returning tax money it collected? Using Stats Canada data on household energy consumption, University of Calgary economist Jennifer Winter calculated the cost of carbon tax to average family in Alberta of $1,111, in Saskatchewan of $1,032 and in Ontario of $707.
In other words, the carbon tax is like any other tax: it takes money away.
Realizing new carbon tax will add more burden to Canadians, many provincial governments are pushing back. The new government of New Brunswick – along with the governments of Ontario, Manitoba, and Saskatchewan – has openly stated its opposition. Like the National Energy Program of early 1980s, the carbon tax will likely raise animosity between the provinces and the federal government. It may also lead to court challenges, costing taxpayers untold millions of dollars.
South of the border, Washington State had a referendum on the carbon tax, seeking people’s opinion in true democratic spirit. Voters rejected it, by a margin of 56% to 44%. In fact, only two years before, the voters of Washington state had rejected another carbon tax Initiative, with a 59% No vote.
This rejection comes from a strong Democratic state; if Washington can’t get a carbon tax through, it’s likely no American state can.
That further hurts Canada’s ability to compete economically with the U.S.
The carbon tax is an attempt to raise money for rising debt and deficits as a result of careless spending habits.
If the Prime Minster is so confident that Canadians will embrace his plan, he should put it to a national referendum during the next federal election in 2019.
Dr. Shinder Purewal is a professor of political science at Kwantlen Polytechnic University, a regular political commentator, and the author of two books, Tandoori Democracy and Sikh Ethnonationalism and the Political Economy of Punjab. He lives in Surrey.