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Carbon Tax?

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a_majoor

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Since the idea of a spring election has come and gone, let's look at one of the issues that is supposed to define the electoral debate at some uncertain future time. Garth Turner seems to believe that the Liberals will offer a big income tax cut in exchange for a carbon tax, but while a permanent income tax cut is indeed a good thing, Steve Janke deconstructs how the Carbon Tax will actually play out in Canada:

http://stevejanke.com/archives/266245.php

Stephane Dion's carbon tax details revealed -- permanent income tax cuts!
Monday, June 09, 2008 at 11:57 AM

What we've all been waiting for -- the definitive explanation of just how Stephane Dion's carbon tax is going to work.

Needless to say, the revelation did not come from a news conference or a white paper released through the Liberal Party website.

The details are hidden in Garth Turner's blog...of course.

For those Luddites who think that a carbon tax is a bad thing, Garth Turner explains how the carbon tax works:

The tax-shift plan is about more than cutting your taxes, though. Since Dion wants to put a price on pollution, a major goal is clearly to reduce it. Suddenly companies that clean up their act would be better off financially. Those that don’t, or can’t, pay more.

Would those polluters – oil producers, hydro generating stations, smelters, mills, manufacturers – pass on this new tax burden to consumers in the form of higher prices? After all, this is the foundation of the Conservative attack on the idea. (By the way, Mr. Harper’s government has yet to force any companies to reduce their polluting emissions.)

Well, that’s what the shift in taxes is all about. As the cost of home heating oil, for example, rises gradually over four years, so would family after-tax income thanks to the Dion tax cuts. More importantly, if you made your house more energy efficient, and burned less oil, then you’d be better off financially – since your income tax rate would have been cut permanently. As for gasoline, the Liberal leader has been categoric – no hike in gas taxes since there is already a hefty federal excise tax collected from every litre sold.

A quick aside.  Garth Turner lists hydro generating stations as a major polluter.  Of course, hydro energy is clean energy.  Either this is a typo, or Garth is revealing that the carbon tax is really an energy tax, regardless of the source of the energy.  The jury is still out on this.  We'll have to wait for more revelations on Garth Turner's blog to clarify this point.  We'll put is aside for the moment.

OK, so let's walk through this.  Let's consider a major industry, let's say a pulp-and-paper concern.  A paper mill uses a lot of fuel, which has now been jacked up in price thanks to Stephane Dion's carbon tax. 

No problem.  The mill just increases the cost of the products it sells.

Am I, the consumer, getting screwed again?

No, says Garth Turner.  See, I get to pay less income tax.  The money the government collects from the pulp-and-paper concern is given to me as a tax break, so I can afford to pay for more expensive paper.

I'm not actually ahead, since I'm still out the money and I still have the same amount of paper.

But then I'm not behind either.  Which would be true if the money being given back to Canadians was given back efficiently, that is, no money being shifted remained in government hands to pay for the administration of the tax.  The GST costs the government 30 cents for each dollar collected, as a way of comparison.  Hopefully the carbon tax will cost nearly nothing to administer, or else I won't see all my money back.

Of course, I'm assuming I'm getting the amount I paid out in carbon taxes back in income tax breaks.  If the income tax breaks are divvied up to meet some other goal than to compensate for my carbon consumption (let's say the income tax breaks are geared to reward favoured Liberal constituencies), then I might find myself short-changed.

But even if I did find myself suffering financially as a result of the carbon tax, I can still get ahead, thanks to Garth Turner's explanation of the Liberal plan.  All I have to do is borrow money to pay for home upgrades.  As Garth Turner explains, I make my home more efficient, because, as you know, the modern building codes in Canada with regards to efficiency are so bad.  Double-pane windows?  Make 'em triple-paned!  Now with the trickle of energy escaping turned into a dribble, I can use the savings from my lowered heating bill to help pay the bank loan I took out for the new windows.

This is what Garth Turner means by being "better off financially".  It works because the income tax cut is permanent.

Got that?  My income tax has gone down and won't go back up.  Ever.  It's permanent!

Wow.  That is tempting.  I mean, Garth Turner even explains how it all hangs together.  It's worth repeating:

As the cost of home heating oil, for example, rises gradually over four years, so would family after-tax income thanks to the Dion tax cuts. More importantly, if you made your house more energy efficient, and burned less oil, then you’d be better off financially – since your income tax rate would have been cut permanently.

So I pay less in carbon tax because I am more efficient.  I pay less in income tax.  The rise in prices that the carbon tax has created in consumer goods is offset by the permanent income tax cut. 

This is great! I hope it lasts forever!

But then the government is collecting less in income tax.  As carbon usage shrinks, the carbon tax revenue shrinks.  The taxation of carbon will rise to compensate for reduced revenue, as well as to push Canadians to the goal of 80% reduction in our 2% contribution to global greenhouse gases by next Thursday.  Garth Turner reveals that the cost to heat your home will rise year after year as the carbon tax continues to be jacked up.  This increase will eat away at the value of the permanent income tax cut.

Since I can only insulate so much, I'll have to find a way to pay for the rising tax, or move my family into an apartment.

Will there be a rule that says that the total amount of carbon tax I pay can never exceed the total value of my permanent income tax cut?  Garth Turner doesn't say, so I guess that it is possible that the carbon tax could overwhelm my income tax break.

That would be a shame. 

To get out of the hole created by the growing carbon taxes, I would have to join other Canadians in a frantic race to find ways to consume less.  People would make their homes as efficient as they can afford.  Plans for car purchases would be abandoned.  Frivolous spending could disappear entirely. 

As their disposable income continues to shrink over time, whatever income there is would be thrown against the rising tide of the Stephane Dion carbon tax, like sandbags against a flooding river.  Some people would be able to hold against the deluge, but many would be overwhelmed.  

At some point, we'd buy only what food we absolutely must have, takes trips that absolutely must be taken, and live in the absolutely minimum amount of space needed.

Life is reduced to the irreducible.

And that paper mill with the expensive paper?  Shut down long ago, I bet, and moved to Mexico.

Glad you could fill us in on the details, Garth.

P.S. To any Liberals reading this.  If Garth Turner didn't blab about this sort of stuff on his blog, I wouldn't be able to write it.  Just saying.

P.P.S.  Oh look, Garth Turner's very public musing, including his admission that the Tory campaign has generated "an avalanche" of emails, is now leading the news.  I guess thanks to Garth Turner and his blog, Liberals will have to respond to this development.

Of course, allowing energy prices to move with the market will do an awful lot to change behaviours (the supposed rational for the Carbon Tax), while permanent tax cuts can be delivered by any government; all they have to do is prioritise their spending on their Constitutional or Provincial mandate, eliminate programs and spending that does not fall within the mandate (narrowly defined) and pass on the savings to the taxpayer.
 
Hmmmm,

I recently "fought" a pitched battle on CBC's website comments on this subject.
It, sadly devolved into a test of wills, check your wits at the door ,please.

The Lieberman-Warner (US) bill got withdrawn after very little debate.
Ken Livingstone is no longer the mayor of London and even PM Browne is reconsidering carbon taxes in the UK.  Rudd's government is feeling heat and several European governments, er..... have problem.

It would be soooo Canadian (liberal) to bring in carbon taxes when the rest of the world "zags" and then bring in fuel subsidies.......  ;D
 
Flip said:
.... Rudd's government is feeling heat and several European governments, er..... have problem.

I'm getting a chuckle out of this one -

Rudd calls for OPEC oil boost
June 08, 2008 10:17am

THE Rudd Government says only OPEC can help reduce petrol prices by increasing the supply of oil to countries, including Australia.....“OPEC need to open the production lines to a greater extent, increase global oil supply.

“They've done it a bit in response to representations from President Bush.

“The G8 provides an opportunity to apply the blow-torch to the OPEC organisation and its time that happened.”

http://www.news.com.au/story/0,23599,23830419-29277,00.html

And this geezer got elected on a Pro-Kyoto ticket and joined in the cavalcade of Goriacs dissing Bush at Bali, along with our own Dion.  Now he wants Bush to put more pressure on the Saudis to pump more oil.....It is just too good.

Right up there with the Branson Bio-Fuel Famine.

 
In a few short weeks, we'll be trying this insanity out here in BC.  I'll let you know how it works!  ::)
 
Ranger - I'm ducking and running.  Selling up in Aldergrove and moving to Alberta.
 
A tax on pollution outputs stands on its own merits: a cost charged for use of "the commons".

The plan described in today's news is not a simple "pay new charges passed on to consumers in one hand, receive tax cut in the other" as Dion would like to spin it.  Some of the "cuts" are targeted tax credits, which is to say, public spending.  (When governments pay benefits to selected groups out of general revenues, that's a spending program, not a tax cut.)  Also, it's not clear yet that the value of the cuts and handouts adds up to the expected tax take; if that is so, I take it to mean that the Liberals are trying to sneak in a revenue buffer to increase spending, because they collectively have the brain power and sufficient people to do the arithmetic to make it truly revenue-neutral.

In an ideal world, a pollution tax increase mirrored by income tax decreases would be a good thing.  Over what you are taxed, you have no power of discretion.  For what you spend of your own money, you have the power to choose whether to change your spending habits.  This would be a "win" for the individual; and, to the extent some people might choose to reduce their polluting behaviours (and expenses), a "win" for "the commons".
 
Let me see if I have this correct. We get a 1 - 1.5% tax break and the costs passed on by the industries, and taxes on electricity and heating fuels go how high? Were is the neutrality in that?
 
I’m not a fan of excise taxes.  Not for any good reason, I just don’t like them.  But, as much as I don’t like them,  I know they are useful.  Governments use the tax code to encourage economic activity they want and discourage activity they don’t want.  I think of the super extra taxes placed on cigarettes, and tax breaks for hybrid cars.

There is a special tax credit you get if you buy new manufacturing equipment for use in the Atlantic provinces and the Gaspe region; there is also a tax penalty if you set up a “corporation” for no reason but to pas less in taxes. (well not so much of a penalty, but a ‘correction calculation’ to make sure you’re paying the proper amount)

Companies are in the business of making money; they don’t need to worry about anything else.  Governments have many, sometimes conflicting, focuses. This is usually the reason they do things so poorly, and frankly come up with solutions that obviously were “arrived by committee”.

Let’s say I start up, own and operate a house painting company.  Because I’m a savvy business man I know how to cut corners, instead of spending the gas money on driving out to the municipal hazardous waste site every time I get rid of paint/paint covered materials, I simply make sure no one is looking and I toss it into the sewer system. Instead of dealing with the cost of operating my business, I “externalise it”.  I make more money, the government gets more in income taxes, “consumers pay less” (well the price is set by the market) what could be better?

Unfortunately,  the toxic paint waste I’ve been pouring into the sewer went straight to the local beach and now the businesses along the beach are suffering a sharp drop in business because people don’t want to swim with the dead fishes and get a rash.  They lobby the local government for a cleanup, which will cost a few million, but that cost is spread over the entire town, over a couple of years.

It would have been way cheaper if I’d just dealt with the waste properly in the first place.  It would have been better for everyone, including myself, if I’d been properly motivated to reduce my waste and dispose of it properly.

This is an extremely simple example, but the model does hold.  Remember acid rain?  Now most polluters are required to have scrubbers.

The carbon tax is an attempt to assign a cost to pollution. This lets the innovators and entrepreneurs in the market find ways to perform the same services while producing less pollution. If they can reduce their costs, they’ll have an edge over their competitors and market forces take over. Even if they are competitive, they still have an incentive to reduce their emissions because it means savings for the company.

I don’t really care if the tax is revenue neutral. The Grits are saying that low income earners will see a reduction in income taxes… etc.  Right on – I’m not a high income earner, nor am I a transportation company. If the tax cut I get will be equal to or greater than the increase in prices, that is a perk; I still see the tax holding a benefit. Maybe not for me, but for my children... which I'm not having.
 
OK!  I have had enough of this BS.  I am already taxed at about 75% on Gasoline as is.  I pay a special Tax on the Tires for my vehicle.  I pay a special tax to dispose of the oil from an oil change.  It is driving me to drink, and that is taxed at about the 75% level too.  Even this computer is being taxed.  I pay extra for Hydro, because the Government mismanaged it over the years and has added extra Taxes in the ways of extra fees.  I am taxed for my water and sewer and garbage.  I pay School Taxes.  I pay GST and PST.  There is a tax on food I buy at a restaruant.  My RSP will be taxed when I draw it.  My clothes are taxed.  My coffin is taxed.  My property and grave site are taxed.  Is there anything that isn't already Taxed, or even taxed on taxes.

I suggest that the Government Nationalize everything.  All Supermarkets will be converted into giant "All Ranks Mess Halls" and everyone will no longer have to go shopping to fill their fridges and freezers; they just go into the Mess Hall and eat "all you can eat" whenever they want.  The Beer Store and Liquor Store would be free, but limited to one visit a day.  Bars would be free.  All your wages would be paid to the Gov't as Taxes.  No matter if you worked for the Government as a member of the CF or a Civil Servant, or if you worked for Esso or Nortel; you would be able to get your food at these Mess Halls, fill up your car at the Nationalized Gas stations for free, pick up your liquor for the day for free, live in your house for free, etc.............Christ we might as well as we are being taxed to death.

<end Rant>

;D
 
The part I'm enjoying is that Celine Stéphane Dion’s message is that “we’re going to be green by not taxing the SUV drivers but making senior citizens freeze in the dark by taxing heating oil and electricity generated by coal, natural gas, etc.” Way to go, Celine Stéphane; that’s a great message; a real vote getter!
 
Dion's whole "Carbon Tax" plan falls into the category of "The Cheque is in the Main - Trust Me", and other similar epitaphs......this is so transparently a gussied up taxgrab, I will be flabbergasted is anyone really falls for it......

THE VOTER IS NOT THAT STUPID!!!.......yuh think?
 
GAP said:
THE VOTER IS NOT THAT STUPID!!!.......yuh think?

One would hope, however Canadian political history would often suggest otherwise.  ::)
 
A few thoughts come to mind...... ;D

It seems to be a great Liberal tradition to attack tax anything that seems to be attracting a lot of money.  George went down a list and I have to agree, if it appears you've got some disposable income thay want a "piece".

I recall fondly how the NDPs inheritance tax turned out.  It was withdrawn late in the election cycle when to Layton's astonishment, nobody like the idea. I told my local NDP candidate to get off my front step.... :o

As for the Liberals, the effing bobblehead! ( Dion )
Having no idea how people outside his circle thinks, he assumes that everyone has magically forgotten about how the gun registry was supposed to fight all kinds of evil and for the low low price of only two million dollars.

He also assumes we have forgotten about the National Energy Program. :rage:
In Alberta there are shrines and alters where revenge is sworn in stone and blood.

I can also remember Jean Cretien saying "Canadians are too rich". Makes you wonder who he was working for, doesn't it?

In the Industrialized world energy = economic growth.
Another inflationary force will not provide any more incentive than already exists.
Just inflation, and all of it's risks. ( My opinion )

I would observe, as Mr Harper is from Alberta, we have our revenge. >:D


 
George Wallace said:
OK!  I have had enough of this BS.  I am already taxed at about 75% on Gasoline as is.  I pay a special Tax on the Tires for my vehicle.  I pay a special tax to dispose of the oil from an oil change.  It is driving me to drink, and that is taxed at about the 75% level too.  Even this computer is being taxed.  I pay extra for Hydro, because the Government mismanaged it over the years and has added extra Taxes in the ways of extra fees.  I am taxed for my water and sewer and garbage.  I pay School Taxes.  I pay GST and PST.  There is a tax on food I buy at a restaruant.  My RSP will be taxed when I draw it.  My clothes are taxed.  My coffin is taxed.  My property and grave site are taxed.  Is there anything that isn't already Taxed, or even taxed on taxes.

I suggest that the Government Nationalize everything.  All Supermarkets will be converted into giant "All Ranks Mess Halls" and everyone will no longer have to go shopping to fill their fridges and freezers; they just go into the Mess Hall and eat "all you can eat" whenever they want.  The Beer Store and Liquor Store would be free, but limited to one visit a day.  Bars would be free.  All your wages would be paid to the Gov't as Taxes.  No matter if you worked for the Government as a member of the CF or a Civil Servant, or if you worked for Esso or Nortel; you would be able to get your food at these Mess Halls, fill up your car at the Nationalized Gas stations for free, pick up your liquor for the day for free, live in your house for free, etc.............Christ we might as well as we are being taxed to death.

<end Rant>

;D

George
Sounds like what many people joined up to fight doesnt it?
 
Problem #1:  Any policy that's based on a lie, is not a good policy.  AGW is a flat-out scam.  Ergo, trying to sell me anything on the basis of "it's going to reduce my carbon footprint" will not only not get my support, but will immediately piss me off.

Problem #2:  The economics of the tax policy is stupid.  If you tax companies WHO EXPORT, you cannot count on increased domestic demand (supposedly because of our lower income tax rates) to offset uncompetitiveness in foreign markets.  In short, I promise you this will kill jobs.

Problem #3:  I can guarantee you this will require an additional cumbersome, expensive addition to our bureaucracy which is exactly the wrong direction we should be going in. 

The blinding stupidity demonstrated by some of those on the Left (not to say the Right are all geniuses) continues to astound me.  Bunch of friggin' clowns....



Matthew.   >:(
 
Flip said:
I would observe, as Mr Harper is from Alberta, we have our revenge. >:D

I'm from Alberta,  I've seen the shrines to vengeance for the National Energy Program.  And not to nit pick but Stephen Harper was born in Toronto and moved to Alberta. ( http://www.conservative.ca/EN/1002 )

The details have just been released,  why is everyone here saying it is a scam?
 
Not to mention that this plan will affect the following:

Yukon Territories
Northwest Territories
British Columbia
Alberta
Saskatchewan
Manitoba (yes there is oil there)
Ontario (first wells in Canada are around Sarnia)
Quebec (gaspe penninsula and the shale gas plays)
Nova Scotia
Newfoundland and Labrador

People focus on Alberta due to the oilsands and number of wells.  But looking accross the country there are alot of other jurisdictions that will also be heavily affected.  Just ask BC, Sask. and Nfld/NS how pleased they'd be to loose their energy revenues.

 
Zell_Dietrich said:
The details have just been released,  why is everyone here saying it is a scam?

Short answer is: because it is.

1. The "justification" for a carbon tax is based on a falsehood (and indeed the low temperatures this year are a far stronger piece of evidence for solar activity driving the planetary climate [the Sun is entering a period of reduced activity which is very similar to observations taken during the "Little Ice Age"]).

2. The so called revenue neutrality is also a falsehood, simply look at the proposed amount of revenue gained by the new tax vs the amount income taxes are supposed to drop: there is a difference of several billion dollars and it is not on "our" side of the ledger.

3. Since energy is so fundamental to our economy and way of life (we live in a cold climate and in a land area second only to Russia), making energy more expensive will have vast ripple effects through the economy. These ripples will also have second and third order effects throughout the globe, if our economy tanks or energy becomes prohibitively expensive in Canada what would happen to our number one trade partner, the United States? What about China, suddenly deprived of a major market for widgets or a source of raw materials?

4. Tanking our economy through higher taxes would also undermine the very tax base most of Canada's governmental and social programs depend on. If our education and heath care systems are so bad now despite the billions lavished on them, what will happen when those billions are gone?

5. Ref 4; what sort of steps do you think a government facing steeply falling revenues and collapsing social and economic order will take to remain in power. What forms of society have arisen from these conditions in the past?

The bottom line is Carbon taxes and other "Green" initiatives are mostly driven by a desire to expand the powers of government for the self aggrandizing of politicians and bureaucrats. They cannot create wealth, but they can certainly take wealth and enjoy the powers of directing other people's wealth to satisfy their and their client or patron's aims.
 
Meanwhile, we here in BC will be tagged teamed by both Campbell and Dion with this stupid tax!

>:( >:( >:(
 
Nobody is going to confuse me with a Liberal shill but I feel that this Carbon Tax proposal needs to be put in perspective.

The proposal is for a tax of $10/Tonne of Carbon rising to $40/Tonne.  That equates to a penny a kilogramme rising to 4 cents a kilogramme.

A litre of gas weighs 0.73 kg.
Gasoline is 87% Carbon by weight
Therefore a litre of gas contains 0.64 kg of Carbon.
Therefore a litre of gas will rise in price 0.64 cents rising to 2.56 cents.

That won't break the bank.

On the other hand, like so many other initiatives of Stephane it will not only be invisible, it will be ineffective.

The market is creating and absorbing much higher changes in costing than is being proposed here. 

This ineffective, invisible tax will be buried by the invisible hand.
 
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