Tag Archives: flat tax

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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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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