The Case for a Carbon Tax in Canada

Canada 2020 / by Nicholas Rivers

[Canada Free Press] In the lead-up to international climate change summits and the 2015 Canadian federal election, various policy analysts have been trying to make the case for a national carbon tax in Canada. The Canada 2020 think tank has released such a study entitled “The case for a carbon tax in Canada.” While one welcomes the debate on such an important topic, a number of statements made in this report require further discussion and—in some cases—corrections.

For example, the Canada 2020 report claims it is a “myth” that “carbon taxes are unpopular”: “In Canada and the US, ‘tax’ is often considered a four-letter word, such that it is politically toxic to consider increases in the rate of any tax. Some consider carbon taxes to be especially divisive, since they are highly salient and are aimed at tackling climate change, which is not a goal universally considered important…

Another supposed carbon tax myth—at least according to the Canada 2020 report—is that they are job-killers…On the contrary, Australia’s unemployment rate spiked upwards immediately following implementation of its carbon tax. The effect was striking. After remaining approximately constant for the two-year period before the carbon tax was brought in, Australia’s unemployment rate suddenly began a rapid rise coinciding with the carbon tax—and the rate continued to rise right up to when the carbon tax was finally repealed this summer.

Since the UK brought in its Climate Change Act, its economy is going backwards. So is that of Denmark. Among the G7 nations, greater carbon dioxide emissions reductions correlate with lower economic growth, and this extends to other economic groups around the globe. Nations with lower electricity prices have higher rates of economic growth, and reducing greenhouse gas emissions only drives up energy costs—thereby harming the economy.

As for British Columbia, since it brought in its carbon tax during 2008, its real per capita GDP, primary household income, and household disposable income have all underperformed the national average after outperforming the rest of the country before carbon tax implementation. Other economic indicators suffering in BC during the post-carbon tax regime include the rising levels of inflation, lower household saving rates, and the highest average consumer debt in Canada. The unemployment rate has risen in BC almost three-and-a-half times faster than the Canadian average since the carbon tax began, and BC’s employment rate has declined almost twice as fast as the rest of the nation.

All this evidence appears to support concerns that carbon taxes are job killers…


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