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Beware of Costanza-style Carbon Tax Promises

Author: Todd MacKay 2016/10/25

Some promises never really have a chance. They’re made with absolute sincerity. But then they run into reality and break into a million pieces.

Consider the solemn commitment made by Saskatchewan’s lone Liberal member of Parliament regarding the fate of carbon tax revenues.

“Every single penny remains in Saskatchewan and under Saskatchewan’s control,” said Public Safety Minister Ralph Goodale. “Every cent.”

It’s easy to imagine the honourable minister crossing his heart as he went on to say that carbon tax revenues would “allow the Saskatchewan government to eliminate personal income tax.”

Here’s the thing: it’s not true.

Minister Goodale may believe it. And it may reflect the federal government’s current policy. But a string-free transfer of carbon tax revenue from Ottawa to Regina is never going to happen.

Let’s take a stab at how this is likely to play out:

Prime Minister Justin Trudeau is determined to implement a carbon tax starting at $10 per tonne in 2018 and growing to $50 per tonne in 2023. That would mean a new federal gas tax starting at 2.2 cent per litre that rises to 11 cents per litre. According to Minister Goodale, “every penny” would go to the provincial government.

What would be Premier Wall’s next move? The Saskatchewan government opposes a carbon tax because “huge job-creating industries like oil and gas, mining and agriculture — bear the brunt of the tax.” What could Premier Wall do to blunt the brunt of a carbon tax?

Well, Saskatchewan’s provincial gas tax is 15 cents per litre. Instead of eliminating income taxes, Premier Wall could use the carbon tax money from Ottawa to cut the provincial gas tax and keep lowering it all the way down to 4 cents per litre as the federal carbon tax rises. He could implement similar policies for natural gas and electricity.

“Then what is the point?” Asks Premier Wall regarding Ottawa’s revenue recycling plan. “It sounds like a bureaucratic merry-go-round.”

Would it be a farce? Absolutely. But, if Prime Minister Trudeau is determined to implement a carbon tax and Premier Wall is determined to protect provincial job creators, this is the logical outcome of Ottawa’s promises.

Except, of course, it isn’t.

Notwithstanding Minister Goodale’s earnest assurances about “every penny,” that course of action would cause Ottawa to start tying strings to carbon tax money faster than team ropers lasso a calve at the rodeo. Not every penny will be under Saskatchewan’s control because Ottawa will start withholding carbon tax revenue unless it’s used for federally approved purposes.

Prime Minister Trudeau has already made it clear what happens to his promises to the provinces if they conflict with his climate change agenda.

During the election, Prime Minister Trudeau committed to “working with the provinces to reduce emissions.” When Saskatchewan raised objection, the prime minister revised his position regarding provinces that fail to impose carbon taxes: “The government of Canada will implement a price in that jurisdiction.”

It’s not surprising, is it? Getting Saskatchewan to willingly imperil its economy with a carbon tax was never going to happen. The promise to “work with the provinces” never had a chance.

The comedic philosopher George Costanza once said: “Remember, it’s not a lie if you believe it.” Minister Goodale may believe Ottawa will return “every cent.” Prime Minister Trudeau may have believed he could “work with the provinces.” But those who watched George’s Seinfeldian adventures will recall nobody ever believed him. And Premier Wall shouldn’t believe Ottawa’s carbon-tax promises.


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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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