Australia has recently imposed a national carbon tax, amounting to about $25 US dollars per ton of carbon emitted. To prevent disadvantaged and low-income households from being harmed by the carbon tax, over 50% of tax revenue will support low-income households. The remaining funds will be used towards supporting green energy projects across Australia. Through introducing a national carbon tax, Australia joins New Zealand, the EU, and India. The question that remains is when will Canada and the U.S. follow the leadership of the aforementioned nations through introducing carbon taxes?
Carbon taxes are controversial and opponents argue they pose two significant issues: first, they claim it reduces the economic competitiveness of a country; and second they claim it harms low-income households who would need to fork out a larger portion of their income.
Unsurprisingly, Alberta is strongly opposed to implementing a national carbon as the province produces exorbitant carbon emissions from tar sands oil extraction. Consequently, Alberta would have to pay much more taxes to the federal government if carbon taxes were implemented nationally. Ironically though, Alberta does have somewhat of a provincial carbon tax for the worst emitters, whom are required to pay $15 per ton into an "energy innovation fund". Through this provincial carbon tax, tax revenue stays in Alberta and is used for Albertans. Fair? For Alberta, the answer seems to be yes.
Perhaps the solution to passing a carbon tax in Canada is for each individual province/territory to pass their own legislation.
What do you think is the best way to implement carbon taxes in Canada?
For further information on carbon taxes check out this link.
From Yan Yu.
Thanks for sharing. I think provincial carbon taxes would be more effective than a national carbon tax insofar as the legislation allows revenue to be spent on projects that actually reduce carbon. I think Australia has got this right as they appear to be transparent with how the revenue is/will be used.
ReplyDeleteBC's carbon tax (implemented on July 1 2008) has had mixed reviews so far. Because it is revenue neutral it is difficult to funnel revenue into projects that cut down on aggregate emissions (i.e. transit, cycling infrastructure, wind power etc). People and businesses get the money back in the form of tax cuts which leaves hardly any money for carbon mitigating mechanisms.
I say provinces because a more decentralized approach could lead to more direct spending on specific green projects. Each province is different and has different carbon demands and pressures. Plus, you can avoid preferential treatment and equity issues by having separate provincial carbon taxes as each province is in charge of what they want to use the revenue for, instead of competing for different national projects (e.g. a wind power project in Nova Scotia versus a biofuel processing unit in the Prairies, for example).
Tim Shah (www.enviroboys.com)