Utopian legislators in the United States often look with rose-tinted glasses upon the Canadian approach to everything, from higher education and medical care to global warming and international affairs. Since Canadians are the ones who live with such policies, they’re more inclined to recognize their mistakes and reverse the course, as exhibited by Alberta’s carbon tax.
The repeal of the carbon tax in Alberta has had one indisputable beneficiary: Albertans. Premier Jason Kenney introduced the repeal bill in May as one of his first actions in office, arguing the tax imposed on families an undue burden with no significant environmental benefit.
The carbon-pricing scheme was supposed to decrease fossil-fuel consumption and provide incentives to use alternative energy. But over the course of a single year, it cost individuals $286 and couples $388, on average. Couples with two children paid $508.
And these stiff prices didn’t account for indirect burdens arising through more expensive groceries further inflated by higher transportation costs to the Prairie province.
As well, the carbon tax, which went into effect in 2017, set back Alberta businesses by $1.4 billion per year, a downer for investment and job growth.
The repeal, however, may not be the final word on the matter. A federal Liberal government would impose a carbon tax on Alberta on Jan. 1, 2020 – in the same way it has done with Saskatchewan, Manitoba, Ontario and New Brunswick. In these four provinces, in 2019, the federal carbon tax started at $20 per tonne of carbon emitted. This means an additional 4.4 cents per litre of gas, and the tax is scheduled to increase annually until it reaches 11 cents per litre in 2022, or $50 per tonne.
The Albertan government has vowed to challenge the federal imposition in court when the time comes, even though Ontario and Saskatchewan had previously failed in that endeavour.
A study by the Canadian Taxpayers Federation shows Canadians pay on average 34 per cent of the pump price in taxes. And they pay sales tax on the excise and carbon taxes when buying gasoline. This tax on tax adds 3.4 cents per litre, making the combined total tax burden range from around 34 cents per litre in Manitoba to almost 55 cents per litre in Quebec.
Australian elected officials acknowledged the lack of affordability of misguided clean-energy initiatives when they killed their own carbon tax in 2014. Repealing it cut over 1,000 pages of red tape, and reduced retail energy costs by nine per cent, average household costs by $500 per year and business compliance costs by tens of millions. Further, the repeal boosted the country’s economic growth and international competitiveness.
The major problem with carbon-tax schemes is they fail to deliver. Allegedly, the motive is not to increase fiscal revenue but to make pollution substantially costlier than emissions-saving sources and technologies. However, governments end up raking in billions while making life harder for families and businesses, with minuscule or nonexistent environmental benefits.
In Australia, the carbon tax decreased emissions by only 1.4 per cent in the second year while increasing energy prices by 10 per cent for the average family. The hike was even more significant for small and medium-sized businesses, since carbon costs and other so-called green schemes constituted up to one-third of their energy bills.
Proponents might be well intentioned, but Australians, as well as Albertans, have paid the price directly for what they saw as an insufficient gain. Alberta’s repeal is in line with wanting both economic prosperity and environmental protection: without the former, we can’t have the latter.
The continued push to burden voters in Australia led to a surprise loss for the Labour Party down under. Daniel Wild, director of economics at the Melbourne-based Institute of Public Affairs, opined in the election lead-up that “the interests of the out-of-touch elite has taken precedent,” as they have across Canada.
Rather than mandating changes and taxing constituents, legislators would be better off focusing on how to provide a business-friendly jurisdiction. Innovation would then thrive as we are transitioning to a more environmentally-friendly economy.
The Stone Age didn’t end because mankind ran out of stones; we simply found better and cheaper substitutes. Likewise, fossil fuels will predominate until they are no longer economically advantageous.
Most inhabitants of this world, especially those in poor countries, still rely on coal and petroleum to power their homes, hospitals and schools. Severe impediments to these energy sources, without readily available alternatives, are heartless and inefficient – akin to asking the poor to remain poor.
A scientific paper in Nature: Climate Change notes that China, India, Germany and the United States have all been substituting coal with natural gas in power plants. This transition, which can take place without stiff intervention, has enabled lower carbon emissions with minimal, if any, penalties on families and businesses.
If more efficient green-energy sources are available at competitive prices, people will prefer them. The solution is not in making fossil fuels more expensive, or in dictating policies from the federal government, but in rendering clean energy cheaper.
Fergus Hodgson is a research associate with the Frontier Centre for Public Policy. Mauricio Bento contributed to this article.