We all know the great eco-fiscal rationale for Canada’s national carbon tax. By putting a tax on carbon emissions, Ottawa is said to be deploying the most effective driver of human behaviour known to economic science: the price system.
High price equals lower demand for gasoline and other fossil fuels, and therefore lower carbon emissions that cause global warming. As the self-appointed Ottawa-based NGO known as the EcoFiscal Commission says, imposing a carbon price/tax is way more practical, simple and cost-effective than, say, heavy-handed, complicated and cost-ineffective regulation.
It is with these grand economic concepts in mind that we turn now to the federal government’s recently released Greenhouse Gas Pollution Pricing Act (GGPPA), a core piece of legislation that would mandate a national carbon price along the lines advocated by ecofiscalists.
The act provides another opportunity to test the carbon-tax theory. How does this neat and effective market mechanism to stop floods and extreme weather compare with the reality of Canada’s emerging carbon-reduction systems, taxes, regimes and regulatory apparatuses?
Environment Minister Catherine McKenna says the carbon tax “is not a tax grab.” Correct. The carbon-tax system, and all its accompanying regulatory paraphernalia, is not a mere tax grab, it is a giant multibillion-dollar tax bulldozer rolling through the economy accompanied by an entire fleet of heavy regulatory equipment.