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Carbon taxes are harmful for farmers (and everyone else)

Author: Todd MacKay 2017/05/13

 

By Todd MacKay (Prairie Director for the Canadian Taxpayers Federation) and Robin Speer (Executive Director of the Western Canadian Wheat Growers)

 

Premier Brian Pallister now recognizes that carbon taxes are bad for farmers. It’s an acknowledgement echoing the precise points we raised on these pages back in March. But carbon taxes cause harm beyond the farmyard.

 

“Many of our farm families exclusively deal in commodities that they sell on the world market. They’d have no influence whatsoever over the price that they can achieve and so there is no way for them to recover additional input costs that they would incur as a result of a carbon tax,” Premier Pallister told the Winnipeg Sun. “Carbon pricing has the potential to very negatively impact on that sector.”

 

Negative impact indeed.

 

Fuel tanks on tractors and combines often hold more than a thousand litres of fuel. British Columbia is charging a carbon tax of 7.7 cents per litre of diesel. That means farmers would pay almost $100 in carbon taxes per fill and they can go through a tank a day during seeding and harvest.

 

But Manitoba farmers compete in a global market when they sell their products. President Donald Trump isn’t going to force American farmers to pay a carbon tax. Australia has already tried a carbon tax and repealed it. A carbon tax would hamstring Manitoban farmers with higher costs and make them uncompetitive.

 

However, even a carbon tax exemption on direct costs for farmers is only a partial victory.

 

Manitoba’s biggest single carbon emitter is a fertilizer plant in Brandon that accounts for more than 3 per cent of the province’s total emissions, according to Climate Change Connection. A carbon tax would force a choice: raise fertilizer prices or move operations to a different province or country. Either option will cost farmers money.

 

Consider trucking costs. Farmers may get an exemption for costs they incur in the field or the barn, but they don’t get paid until those products get to market. Every bushel of wheat and side of beef is moved by the trucking industry. Alberta truckers have been hit by that province’s carbon tax and some are adding a surcharge to their bills.

 

The premier’s acknowledgement that carbon taxes are bad for farmers begs the question: what about other sectors? Manitoba exports are worth $13.7 billion in 2015. Wheat is Manitoba’s number one export at $973 million, but Manitoba also exported $761 million in nickel and $617 million in petroleum products. If a carbon tax would make Manitoba’s wheat less competitive, the same concerns apply to other exports.

 

Even worse, every carbon tax exemption means everyone else is left to carry a heavier burden. Agriculture accounts for about one-third of Manitoba’s emissions. If Premier Pallister wants to make Manitobans reduce their emissions by punishing them with a carbon tax, he’ll have to enforce much deeper emission cuts on everyone else to make up for the exemption for farmers.

 

Here’s the worst news: carbon taxes don’t work. British Columbians are paying higher taxes due to a carbon tax, but emissions in that province are rising. Even if Premier Pallister imposed a carbon tax high enough to eliminate all of Manitoba’s emissions, the improvement wouldn’t even register on a global scale because Manitoba only produces 2.9% of Canada’s emissions and Canada produces only 1.6% of global emissions.

 

Common sense Manitobans know carbon taxes don’t work and Mainstreet Research polling found that 50% of Manitobans oppose a carbon tax, 39% support it while 11% are unsure.

 

If Premier Pallister believes Manitobans want a carbon tax, he should keep his promise to restore “Manitobans’ right to vote on any proposed major tax increases.” The premier’s admission that a carbon tax would harm farmers provides clear proof that a carbon tax is a major tax. Rather than picking winners and losers with exemptions, the government must give Manitobans a vote on carbon taxes.


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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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