Wednesday, June 25, 2008

Scrap This Part Of The Green Plan

From the Liberal Party booklet:

Introduce a new, universal child tax benefit worth $350 per child, per year, on top of all existing child benefits. This will provide direct financial assistance to Canadian families whether or not they pay any income taxes.

This, I think, is the bit Thomas Aquino is talking about when he says:

"There are a number of good things in the Dion plan, no question about it, but one of my major concerns . . . is that the idea of using environmental taxes to deal with social policy that is not related to the environment, in my view, is a bad idea..."

It's also the sliver of truth in the Tories claim that The Green Shift is a "tax grab/redistribution scheme" meant to fund Liberal election promises. Take this provision out and you kill their best argument; you also presumably can set the carbon tax rate lower, as you won't need the cash to cut everyone with a kid a $350 cheque.

13 comments:

The Grumpy Voter said...

If they don't take that provision out, it confirms everything the Tories are saying - that this is less about environment and more about bankrolling social spending.

Dr. Tux said...

First of all,

The greener, fairer, richer Canada you keep hearing Dion speak about actually means something. It means that the next government of Canada will no longer be dealing with one off issues.

We won't be pitting the environment against the economy against social justice. No more ministerial silos.

Instead, we will be dealing with issues in an integrated and holistic way.

Secondly, the greatest investment a country can make is in its people. The capacity of Canadians to deal thoughtfully, compassionately, and innovatively with the challenges of the 21st century, will set us apart from other countries.

The challenges of the 21st century require the best capacities of Canadians, and for that we need to invest in our people.

Mark Francis said...

Well, then, they'd better up the tax cut then.

Though, in that case, I guess people who would pay no appreciable tax because they're too poor will become even poorer as prices increase due to the tax?

According to the LPC calculator my wife, three kids and I would get about $2400/year back. Without the child benefit, we'd get $1350.

Unfortunately, the carbon tax is expected to cost us all about $100/month per family member per $10/tonne charged. When the tax reaches $40, I'll be paying $2000 extra per year. After applying the tax cut, that's a loss of $650/year.

(See http://www.progressive-economics.ca/2008/06/20/dions-green-plan-or-mintzs-tax-plan/ for an explanation of where I got the $100/head figure)

Folks, I don't have it. We are in seriously bad straights as it is now.

My wife can't make nearly enough to justify the $2800 in chilcare/month we'd have to pay if she went to work.

This is a tax shift policy. Tax the bad, reward the good.

Are my children to now be considered a tax liability? Certainly the Conservatives would scream about that.

The concept of tax shifting is about shifting tax from good things like effort to bad things like pollution. From there, people can choose to spend the windfall to decrease their carbon footprint, or not. It is not just an environmental tax. There are deliberate social and fiscal impacts designed to reward certain behaviours and penalize others. You could call it social engineering, except what we have now is social engineering. Tax shifting is trying to make prices reflect the true cost of things which are otherwise traditionally kept external to the prices we pay.

CO2 is very expensive. What's the real cost of global warming? Shouldn't it be on the price tag too?

Currently, our polluting lifestyles are being heavily subsidized by the incomes of future generations. Ironically, this is what the Conservatives actually advocate! Subsidy from the future! it not only violates their political philosophy, it's completely anti-democratic and a thorough violation of liberty as the unborn can't vote!

To not give lower income families enough to at least counter the tax violates what a tax shift is about.

In my case, without those extra dollars, you are actually taxing me for having children.

Now -- ha! -- there is a case to be made there for taxing children (more population, thus more enviro and resource problems), but it's not fair to introduce the policy unannounced _after_ the kids are born.

Dr. Tux said...

Marc,

I don't think that the calculation of $100 per head from a $10 tax per tonne of carbon is right.

I'm fairly certain that most Canadians, especially lower and middle income Canadians, will be much better off.

This plan isn't the entire platform, and that also has to be recognized. The sky is falling hysteria is way over the top (not accusing you here, you seem a decent and honest fellow who wants to deal with GW. It's general hysteria which is politically motivated - promote fear!)

The funny this here is that we are seeing the NDP put social justice against the environment and we are seeing the Conservative put the environment against the economy. In truth, the three go together and are interconnected.

Wasting people or the environment is bad economics, and we need to deal with these challenges in an integrated way.

Dr. Tux said...

Marc,

According to the Green Shift Plan,

The direct costs for the average Canadian household will be $250/year.

Mark Francis said...

Dr. Tux,

I am an LPC member, am a former green party member of some consequence, am well acquainted with tax shifting, and have read the Green Shift doc.

Direct costs would be for things like heating oil and natural gas.

Indirect costs are also very much present under this plan, and are thought to exceed direct costs.

The sum of indirect costs and direct costs is to be well over $250/household.

Which is where the $100 per $10/tonne of tax per person in the household comes from.

jaybird said...

Dr. Tux: The NDP is not pitting social justice against the environment - far from it. A cap and trade system as proposed by NDP is specifically designed to put the financial onus on corporate polluters by setting a hard cap on GhG emissions and requiring big corporate polluters pay if they exceed the cap. Revenues generated by this system could then be used to help fund more and better transit and retrofit programs for homes and rental stock (which will help individuals reduce their carbon emissions), it could also be used to help sectors of the economy create more green collar jobs.

I sympathize with Mark. As someone who lives on a very tight budget, it is the daily costs of a carbon tax that would be incredibly difficult to sustain. As someone who has run income tax clinics for the working poor, pensioners and those on social assistance I can promise you that there is a high non-compliance rate even when people are told they would qualify for GST rebates and child tax credits. So these folk will be hit by increased daily living costs and won't see the reported benefits of the shift.

Three of the four national federal parties realize that carbon must be priced. The question is, which approach will balance social justice with the environment and the economy. IMO the NDP plan would be most effective at meeting that balance. Unlike the LPC plan there is a hard cap of corporate GHG emissions. Unlike the LPC plan there will be revenue to help individuals and business make greener choices and reduce their carbon footprint.

In terms of the economy, both US presidential nominees support a cap and trade system and the two largest provinces in Canada have recently agreed to move forward with a cap and trade system.

It is absolutely crucial that we move forward with carbon pricing and I know that Layton would be happy to debate Harper, Dion and Duceppe about which approach will be most effective for Canada.

Mark Francis said...

The LPC is still moving forward with cap-and-trade. It's on page 22 of the Green Shift document. The LPC is after a hybrid system, much like Europe.

Unfortunately, cap-and-trade will raise prices, and although funding infrastructure and housing improvements to offset those costs is great, the benefits would not immediately flow, though the increased costs would.

I have not been impressed with the NDP on this issue.

Check out what Progressive Economics has to say about it:

http://www.progressive-economics.ca/2008/06/20/dions-green-plan-or-mintzs-tax-plan/
http://www.progressive-economics.ca/2008/06/25/the-bc-ndps-axe-the-tax-campaign/

Mark Francis said...

Sorry. Those links again:

Dion’s Green Plan or Mintz’s Tax Plan?

and


The BC NDP’s Axe-The-Tax Campaign

Dr. Tux said...

Hi Marc,

Yes I've read those articles. The $100 per head per month is not credible.

You're right in saying that there will also be indirect costs, but those are hard to calculate as businesses either will pass down costs or will figure out how to compete in a carbon constrained economy.

Mark Francis said...

Why is the $100/head/year not credible? I don't know how it was calculated, but the economists who did support the plan.

Dr. Tux said...

Marc,

Are you saying that Doug Porter (Chief economist, BMO), Don Drummond (Chief economist, TD), Jack Mintz, et al., wrote that this will cost $100/head/month?

Because I don't think that's true at all.

Mark Francis said...

No. I had linked up above, but the link broke.

Go to

http://www.progressive-economics.ca

and search for the blog post mentioning Jack Mintz's name in the title.

I'm curious about the math as well. I've not seen anyone else put a price on the policy as yet.