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A Carbon Tax Plan Must Start with a Referendum

Author: Todd MacKay 2016/09/10

The provincial election made one thing clear: major tax increases require referendums.

Premier Brain Pallister recently hired David McLaughlan to work on the campaign promise to “develop a made-in-Manitoba climate action plan” that includes “carbon pricing.” The promise is vague, but if the government forces people to pay for carbon, it’s a carbon tax. A carbon tax must start with a referendum.

The PC platform clearly promises to “bring in legislation in the first legislative session restoring Manitobans’ right to vote on any proposed major tax increases.”

Premier Pallister strongly reinforced that promise.

“Let’s trust Manitobans to make the decisions on whether these major taxes are going to be increased or not,” said Premier Pallister during the campaign. “Let’s give them the right to vote on these major issues.”

Despite this clarity, there’s always temptation for political spin doctors to twist promises. Let’s expose and dispose of those temptations.

The first twist a spin doctor might attempt is to claim the referendum promise only applies to major taxes such as business taxes, sales taxes, income taxes and health and education taxes. The promise leaves room to change “minor taxes” such as tobacco taxes. A carbon tax wouldn’t count, right?

Ontario’s cap-and-trade system imposes huge costs on businesses and many of those costs are passed on to consumers. British Columbia’s carbon tax directly imposes higher costs on virtually everything, including a 6.7 cent per litre tax on gasoline.

There’s nothing minor about a carbon tax, so a referendum would be necessary.

But what if the carbon tax is offset by other tax cuts so it’s revenue neutral?

The real question is: revenue neutral for who? Alberta Premier Rachel Notley says her province’s carbon tax is revenue neutral because the money stays in the province even though it’s in government coffers rather than people’s pockets – obviously, that’s not neutral for taxpayers. BC trims other taxes in proportion to carbon tax hikes, but BC’s system is far from neutral for many people who are stuck with higher prices at the pump and don’t get any benefits from boutique tax cuts such as a film tax credit.

Imagine what it might look like in Manitoba.

A film-maker biking to work in downtown Winnipeg could pocket a film tax credit without paying much more in carbon taxes and therefore come out ahead. However, a farmer near Morden might get an income tax break, but pay an extra $90 in carbon taxes every time the combine needs fuel and come out way behind.

Even a so-called revenue neutral carbon tax has thousands of winners and thousands of losers and everyone has a right to vote in a referendum.

A spin doctor might try a simple twist: the carbon tax is in the platform so the people have already spoken.

It’s important to read the platform carefully. It promises to “develop a made-in-Manitoba climate action plan.” Making a plan and implementing it are different things. Further, the real meat of any platform is found in the numbers and there are no numbers in any of the campaign documents about a carbon tax. Lastly, moving beyond planning to actually implement a carbon tax would be subject to the referendum promise.

In the end, a spin doctor might shrug and point out that Prime Minister Justin Trudeau is going to impose a national carbon tax and there’s nothing the province can do about it.

Not so. Premiers stand up to prime ministers routinely. Saskatchewan Premier Brad Wall is setting the example by leading the opposition to a carbon tax. Premier Pallister cannot collaborate with Prime Minister Trudeau on a carbon tax without a referendum.

Premier Pallister got his job largely because he said Manitobans have the right to vote on tax hikes. If Premier Pallister trusts Manitobans, he will hold a referendum before implementing a carbon tax.


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