Tag Archives: carbon tax

Voter turnout is heavy in Durham and York region, the middle class is voting for Harper and splitting the vote to Layton. Dion’s leadership maybe in question?

Update (7:56pm):Just came back from voting and turnout is heavy. I had to wait in line for a long time as it went outside of the High School and into the parking lot. Durham residents are voting, are you?

Update (10:14pm): It will be a Conservative win for Harper. The question is how large of a win? In Durham region there are some tight races in Oshawa. There is no way to declare a winner at the moment. Tonight is definitely a strange night. The Conservatives are doing well across the board. However, the Liberals are actually looking strong in Quebec, which is a definite blow to Jack Layton and the NDP. It will be interesting to see the numbers from B.C as they come in. However, no matter how you  put it, at the moment this is the Conservatives night. Albeit, still a minority at the moment they are picking up seats in Ontario. Dion has helped in Quebec, however strangely they are hurting in Ontario, which is there base. An interesting note is Ontario’s north has gone NDP. I am not sure if this is a pattern for Jack Layton to go on, however it’s an interesting note for the future. The NDP vote is definitely up in percentage, however he must be disappointing with the seat total. Also, the Conservatives are doing well in Thornhill with Peter Kent. Better thank Peter Shurman for that pick up! Dion will definitely have to explain the Carbon Tax to his caucus. Canadians were either in fear (a general lack of understanding) of the Carbon Tax. Or is this a message from Ontario on his leadership?

BIG NEWS: Oh my! Garth Turner has been defeated! Harper must be happy….

Update: Voter turnout may have been heavy in Durham, however across the Country it seems NO ONE CARES. Voter turnout was the lowest in Canadian history at only 59%.

Carbon tax: a conservative concept, not the Liberals

By: Werner Patels

Jonathan Kay raises interesting points about the carbon tax and posits that it’s actually quite a “conservative” tax. I’d like to refer readers to Kay’s article, in which he makes a number of very valid observations – apart from the fact that Stéphane Dion should be sacked, he also reminds people that conservatism is not the mean-spirited ideology that the less-than-intellectual always make it out to be:

Many people casually associate the word “conservative” with unfettered capitalism and mindless consumerism. That is a fallacy. A true conservative in the Edmund Burke mold is suspicious of any revolutionary creed that challenges the established qualities of a humane society, especially a creed — such as unbridled materialism — that corrodes family life and human spirituality.

Absolutely true. This is why a real conservative won’t be the typical frenetic Bible-thumper, because he or she has realized that a fundamentalist Christian is often no better or worse than a fundamentalist Islamist, for example.

I fully agree that Dion deserves to be sacked — not only over his Green Shift, but quite generally. He’s not cut out for politics and should be sent back to his Ivory Tower at university where he belongs (or some Marxist summer camp in Paris) – back to your real roots, Monsieur Dion!

Having said that, it was a high-profile conservative who made a very strong case for shifting taxation away from income and on to consumption: David Frum, in his excellent book Comeback: Conservatism That Can Win Again.

So, a carbon tax is actually quite a good concept in theory, one that fits right in with the green-blue environmental conservatism championed by none other than one of Canada’s greatest politicians ever, if not the greatest, Preston Manning.

Manning formed the Reform Party in 1987. His chief policy adviser was Stephen Harper, a student at the University of Calgary and now the Prime Minister of Canada. Harper designed the Reform Party’s 1988 campaign platform. The Reform Party was a combination of fiscal conservatism and populism, though aspects of social-conservatism grew, branding the party as “very right-wing.”

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Liberal Party of Canada – Carbon Tax Plan

By Mike Moffatt, About.com
For a plan put together for political, rather than environmental or economic purposes it is rather strong. Overly timid and chooses progressivity over efficiency, but a solid plan nonetheless.

Basics of the Liberal Carbon Tax Plan

The Liberal plan is relatively straight-forward – a $40/tonne on carbon dioxide emissions, phased in over a 4 year period. This tax would replace a number of existing excise taxes on carbon based fuels. Since the existing federal gasoline tax is equivalent to the rate 42 dollars/tonne of carbon, gasoline taxes are not unchanged with this new tax.

Once fully implemented the carbon tax is expected to bring in 15 billion dollars. With this revenue, the Liberal plan is to reduce other taxes by 9 billion. The plan is to reduce both corporate tax rates (1 percent for both the regular and small business rates) and income tax rates (a 1 1/2 percent reduction in the lowest tax bracket, 1 percent reduction in each of the middle two tax brackets and no change to the top tax bracket).

The remaining 6 billion dollars is allocated to a grab-bag of tax rebates, largely aimed at low income families with children.

Strengths of the Liberal Carbon Tax Plan

There are a number of things to like about the Liberal plan.

  • The plan is revenue neutral, if one considers tax rebates equivalent to tax cuts. Even if you take the view that a tax rebate is a spending program in disguise (which I do), 60 percent of the revenue from the carbon tax is still allocated to tax cuts.
  • The two types of taxes being cut, corporate income taxes and income taxes are two of the most damaging taxes to the economy. Cutting these two taxes should largely offset the economic damage caused by the carbon tax.
  • Since this tax replaces a number of existing taxes, it may be possible to keep the administrative and enforcement costs of the tax relatively low.
  • The progressive nature of the plan and the fact that almost all of the benefits go to consumers (whereas much of the carbon tax will be paid by businesses) may make the idea of a carbon tax easier to swallow for consumers. Particularly if they realize that in the short-run the plan acts as a transfer of wealth from businesses to consumers.

Weaknesses of the Liberal Carbon Tax Plan

The plan is relatively timid – a higher carbon tax rate would allow for more dramatic cuts to corporate tax rates. The three most damaging marginal tax rates – the small business corporate rate, the regular corporate rate and the highest marginal income tax rate receive the smallest rate cuts (in the case of the top income tax bracket, it sees no cut at all). That, along with the tax rebates make the plan more economically damaging than it could have been.

Final Thoughts

It is far from an optimal plan, but as a plan designed to help win an election, it still contains a great deal of economic benefits.

Wikipedia’s definition of a Carbon Tax

carbon tax is an environmental tax on emissions of carbon dioxide and other greenhouse gases. It is an example of a pollution tax.

Carbon atoms are present in every fossil fuel (coal, oil and gas) and are released as CO2 when they are burnt. In contrast, non-combustion energy sources — wind, sunlight, hydropower, and nuclear — do not convert hydrocarbons to carbon dioxide. Accordingly, a carbon tax is effectively a tax on the use of fossil fuels, and only fossil fuels. Some schemes also include other greenhouse gases; the global warming potential is an internationally accepted scale of equivalence for other greenhouse gases in units of tonnes of carbon dioxide equivalent.

Because of the link with global warming, a carbon tax is sometimes assumed to require an internationally administered scheme. However, that is not intrinsic to the principle. The European Union considered a carbon tax covering its member states prior to starting its emissions trading scheme in 2005. The UK has unilaterally introduced a range of carbon taxesand levies to accompany the EU ETS trading regime. Note that emissions trading systems do not constitute a Pigovian tax because it entails the creation of a property right. Nonetheless, both taxes and tradable permits put a price on emissions, and that price is equal to all parties involved. Therefore, emission reduction targets are met at minimum cost.

The intention of a carbon tax is environmental: to reduce emissions of carbon dioxide and thereby slow climate change. It can be implemented by taxing the burning of fossil fuels — coal, petroleum products such as gasoline and aviation fuel, and natural gas — in proportion to their carbon content. Unlike other approaches such as carbon cap-and-trade systems, direct taxation has the benefit of being easily understood and can be popular with the public if the revenue from the tax is returned by reducing other taxes. Alternatively, it may be used to fund environmental projects.

In economic theory, pollution is considered a negative externality because it has a negative effect on a party not directly involved in a transaction.

To confront parties with the issue, the economist Arthur Pigou proposed taxing the goods (in this case fossil fuels) which were the source of the negative externality (carbon dioxide) so as to accurately reflect the cost of the goods’ production to society, thereby internalizing the costs associated with the goods’ production. A tax on a negative externality is termed aPigovian tax, and should equal the marginal damage costs.

A carbon tax is an indirect tax — a tax on a transaction — as opposed to a direct tax, which taxes income. As a result, some American conservatives have supported such a carbon tax because it taxes at a fixed rate, independent of income, which complements their support of a flat tax.[2]

Prices of carbon (fossil) fuels are expected to continue increasing as more countries industrialize and add to the demand on fuel supplies. In addition to creating incentives for energy conservation, a carbon tax would put renewable energy sources such as wind, solar and geothermal on a more competitive footing, stimulating their growth.

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