Friday, June 13, 2008

Make The Carbon Tax Revenue Negative?

An interesting idea from Andrew Coyne:

It might have been better, indeed, to have talked up the income tax cuts first — to present the plan as an income tax cut, financed by an environmental levy, rather than as a 'revenue neutral' carbon tax. Some such shift in emphasis is still possible, simply by front-loading the income tax cuts — that is, by making the package 'revenue negative' in the early years. It is sensible policy to start with a very low rate of carbon tax, giving consumers and industry time to adjust to the much higher rates they will know are coming in the long run. At the same time, there is probably more room in the budget than the Tories are letting on to cut income taxes.

Well, starting with low rates may result in leaving them low forever, as it would mean summoning a another act of political Will to raise them. But what about this:

Dion's promise is that, if the average Canadian is going to pay an extra $1,000 to for example heat their home, they will get $1,000 in income tax cuts. Why not have the tax shift kick in immediately after the income tax cheques have been delivered for the year in question? So Canadians face the shift with money in hand, as it were?

In any case, a good read from the Conservative Guy that Knows Math.


Ti-Guy said...

People who treat finances as a psychological matter are people who have problems managing their money.

I don't care how this plan is sold. I want to know about the various ways it could be implemented. If Andrew Coyne thinks our political culture treats new ideas with "bovine hostility" he can start blaming his little clique of "journalists" in the corporate media who have rightly concluded that ginning up hostility is just the best thing to engender political immobility and indifference....which is what the corporates want, after all.

JimBobby said...

Whooee! Coyne's on the money when he sez Dion flubbed the presentation. Bigtime.

I disagree with the Revenue Negative idea and also with the idea that everyone who spends an additional $1000 in Carbon Tax will have their income tax reduced by exact same amount.

If the eventually to be released LPC plan is like the GPC plan, Revenue Neutrality is at the receiving end -- not at the paying end.

I think that for many middle-income earners, the tax-shift will, indeed, be revenue positive. Those who have taken or will take measures to reduce their carbon footprint will pay less carbon tax.

Overall taxes will rise for the middle-income earner who owns a couple of SUV's, a power boat, some ATV's and snowmobiles; who drives everywhere instead of walking when practical; and who fails to be efficient with home heating and cooling.

Overall taxes will go down for the middle-income earner who practices conservation and efficiency. This practice is often referred to by naysayers and Luddites as "freezing to death in the dark."

I've taken many measures to reduce my own carbon footprint. I've taken a few online tests to estimate my output and have consistently found that Ma and I use about 60% of what the average Canajun uses. We don't freeze in the dark. CFB lighting, thermal underwear, walking when practical, multi-tasking whenever we use a motor vehicle, digging dandelions and never buying chemical pesticides, composting, keeping the hot water heater set to a reasonable temp, etc. etc.

Despite the fact that we already use only about 60% of the energy used by average Canadian, we live in an older (1880), detached, wood frame house that could use plenty of energy efficiency upgrades. We live in a small town with only one supermarket, one drug store, one gas station, one lumberyard, one hardware store and one set of traffic lights. Not everything we need is available locally but most of it is and much of our shopping can be done on foot.

I expect that a revenue neutral tax-shift will reward people like me and punish people like my boat-owning, 3 vehicle-owning, frequent jet traveling, air conditioner-using neighbours.

That's the whole concept of a carbon tax: to get people to quit wasting energy. If we were to simply offset all carbon with an equal income tax reduction, we would create little incentive. The fact that consumers can lower their tax bill while lowering their energy bill is what makes a carbon tax work.


JimBobby said...

Whooee! After postin' that bigass comment, I tweaked and expanded it a little and posted on my boog.

Revenue Negative, Revenue Neutral, Revenue Positive

Ti-Guy's on the money wrt the MSM stirrin' the pot. I been interviewed a few time wrt Green Party suff and some other things. They're always lookin' for divisions and dissent and in-fighting.


Doubting Thomas said...

"People who treat finances as a psychological matter are people who have problems managing their money."

Can't argue with that one. Ti-Guy, I wish you were as level-headed in your broad-brushes descriptions of conservatives (i.e. we're all racists) as you are in that comment.

Anyhow, I think this whole carbon tax thing is a stupid idea. It's stupid to call it a carbon tax. You're leaving too much room for debate on the whole "is CO2 really a man-made problem" that global warming deniers cling to.

What makes more sense relates to comments that jimbo was making. Essentially, there should be a cost to individuals that make decisions leading to waste and over-consumption. Or at least better incentives to those who choose to reduce waste. I make too much money to qualify for a public transit tax rebate, for example. Geeze, thanks government.

I'm getting a bit convoluted here. Essentially, carbon tax is too complex to implement. Especially this Dion plan. When the government robs Peter to pay Paul, I guarantee there are government inefficiencies along the way.

Ti-Guy said...

I wish you were as level-headed in your broad-brushes descriptions of conservatives (i.e. we're all racists) as you are in that comment.

Well, life's filled with disappointments, isn't it?


"Conservatives" aren't all racist. But a lot of "conservatives" are simply under-educated, uninformed, inexperienced and intellectually lazy...conditions that cause them to find simple and essentialist explanations that characterise racism and bigotry appealing.

It's not a novel observation.

wilson said...

So Canadians are to be sold on a
'permanent tax that will defintely increase over time, a blow softened by an income tax cut/exemptions that select persons/industries will receive.'

'money from oil producing provinces will be redistributed to taxpayers and industry in other provinces'. (NEP2)

BTW, Alberta imposed a carbon tax on industry in March 2007.
Alberta also increased royalties, which slowed down the oil industry.

So if BC and Quebec won't have to thro cash into the liberal tax grab, neither will Albertans.
Where are libs gonna get their money for income tax cuts?

''Go figure -- a carbon tax crafted right here at home
Calgary Herald
March 09, 2007

''Well, some things you thought you'd never live to see. And one of them is an Alberta carbon tax, imposed by an Alberta government on Alberta energy companies, with the companies quietly nodding acceptance......'',+imposes+carbon+tax&hl=en&ct=clnk&cd=3&gl=ca''

Ti-Guy said...

I really hope, once the writ is dropped, progressive bloggers will do something to control the infestation of paid CPC shills like Wilson here.

By the way, why hasn't anyone at CPC Central taught the little fool to code a link in html?

MERBOY said...

Is it possible to introduce a carbon tax as two retail taxes?

Bad products = + x% Carbon Tax
Good products = - x% Carbon Credit

Retailers would have to submit the difference between the taxes they collected and the reductions.

That way for consumers the reduction part would be immediate.

JimBobby said...

Merboy, even when the same tax rate is applied to bad and good products, the good products, by virtue of their goodness, will not be taxed as heavily. This may not be seen by the end buyer on their invoice as a tax but will be reflected in the total price.

By "bad" products, I presume you mean products which have required a lot of energy use in their manufacture and/or distribution. By the time these products reach store shelves, they've been taxed along the way and those taxes will, like every other expense, be incorporated into the price.

Good products will move through the manufacturing and distribution process using less energy and will pay less carbon tax. This will reduce the price at which they can sell the product, giving it a competitive advantage over the energy wasters.

Now, if by "bad" and "good" products, you're refering to products that by their very nature are bad for the environment -- gas guzzlers, high wattage incandescent lightbulbs, ATV's, etc. These will be penalized accordingly when they consume carbon-taxed energy.

No need to complicate it further with a sliding rate scale, IMO. Dion'll have a hard enough time explaining it at a flat rate.

Incentive programs are useful and should continue. The mere fact that efficiency and conservation and good products save an ever increasing amount of money is a big incentive on its own.

The high price of gas is finally stating to have an effect on behaviour with people dumping SUV's and RV's and Cabin Cruisers and doing things like car pooling, using transit more, biking, walking, multi-tasking to save unneeded travel, sticking closer to home for vacations, etc.

The planet's in trouble. These measures that people are starting to take are modest inconveniences compared to what's in store. Get used to it. Peak oil already happened and fossil fuel energy costs will rise as sure as shit. Gas prices may drop a nickel or dime once in a while but they're goin' up in the long run. A lot.


wilson said...

So what's your answer TG? Alberta, like BC and Quebec have a carbon tax.
Exempt one, and Dion will have to exempt them all.
Where will all this incometax cash come from ? Nfld and Sask?
Well, Danny said he'd help Ontario, this could be his chance to put Nfld's money where His mouth is.

The only paycheck I see, is the one I write myself. Just an old grassroots Reformer, never even been to a nomination meeting.

Dante said...

But a lot of "conservatives" are simply under-educated, uninformed, inexperienced and intellectually lazy...conditions that cause them to find simple and essentialist explanations that characterise racism and bigotry appealing

You mis-spelled "Liberal"

Ti-Guy said...

I bet it took Dante all day to come up with that.

...and of course, it's counter-factual, which proves my point.

So what's your answer TG?

Force paid shills to post as themselves and declare their interests or ban paid shilling altogether.

Was that your question, Shillson?

Dante said...

I bet it took Dante all day to come up with that

I didn't mean to impress you so profoundly Ti-Guy. I'll have to re-access the efficacy of my wit and tone it down a bit.

Ti-Guy said...

I think you meant reassess.

It's not my birthday, Dante. You don't have to make it so easy for me.