Dion’s Green Plan or Mintz’s Tax Plan?

There is a lot of the colour green all over Dion’s Green Shift plan.  But after reading it, the greenery appears almost as superficial as the green shift caps that Liberal MPs wore awkwardly with their business suits at the launch yesterday.

Dion’s plan is really a proposal for a tax shifting budget and doesn’t contain any new proposals to deal with climate change outside of the carbon tax.  The only other element in it that would help the environment are further provisions for accelerated depreciation of green technologies.

This is disappointing and I regret being critical.  Dion and his staff seem very sincere and well-informed about the economics of this issue.  They deserve praise for their courage in advocating a new tax while almost all politicians have been terrified of doing so for decades.  They have also had to deal with the increasingly rabid and incoherent attacks of Baird and Harper on this issue.  (I don’t know how Harper sleeps in good conscience at night — but perhaps he’s located Mulroney’s left-over stash of Nytol at 24 Sussex).

Their plan includes some good measures that would benefit many low income earners and families, as Marc has noted.  But these are insufficient and wouldn’t provide any benefit to those who don’t have any employment income or children.

Ultimately, the plan has the paws of Jack Mintz all over it, who just two years ago was very critical of a carbon tax.  Now it appears that he sees as carbon tax primarily as a way to raise revenues in order to cut income and business taxes.  Dion’s proposal is much better than the highly regressive New Brunswick tax reforms that Mintz has also been involved in. But Dion’s  plan could and should have been much better. 

It should have provided compensation for all low income households regardless of whether they have employment income or not.  Those without jobs and low income seniors are the most vulnerable in society and they deserve compensation from the increased costs of a carbon tax as well.  I can only surmise that they were left out because Mintz has argued against measures such as the GST credit (see his footnote on page 28).

Dion’s plan should have been more effective in its impact on the environment and in reducing greenhouse gas emissions.  The government needs to play a central role in this fight and it needs to use the funds from a carbon tax to support green jobs and transition programs and make significant investments in infrastructure so we can build a more sustainable society and economy. 

Understandably, Dion was up against the crazed Harper and others who were prepared to vilify it as a tax and spend program no matter what.  But this is exactly what a solid majority of Canadians want, according to recent polls: a carbon tax that doesn’t hurt the most vulnerable and that raises money for public investments to improve the environment instead of being used to fund yet more tax cuts.

Dion should have taken his courage all the way: his plan should have provided compensation for all the vulnerable and outlined a more comprehensive vision for an activist government to develop a sustainable economy.  The Canadian public is there: it’s time the politicians caught up.  It shouldn’t take that much more courage to stand up to a bully like Harper if millions of Canadians are in support.

N.B.  I’ve finally published some of the analysis I did for the Alternative Federal Budget (now credited in the press to the Green Budget Coalition) on the direct and indirect impacts of a carbon tax for different household income groups on the CUPE website.  There’s a simple rule of thumb that can be used: a broad-based carbon tax will increase costs for each Canadian by about $100 a year for every $10 charged per tonne of carbon dioxide.

This means that, to be equitable, any carbon tax proposals should include a refundable credit or similar support of at least $100 per person for all low and middle-income households for every $10 per tonne charged.  Any plan that doesn’t provide this will be unfair and make the most vulnerable worse off financially.  

5 comments

  • I’m low income, with kids, and will get, according to the calculator, $200/month totaling $2400/yr. There’s five in the household. With the tax at $40/tonne, my cost raise by $2,000, ending with a profit of $400. I’ll take that.

    I’m sure the plan is not sufficient wrt GHG reductions. But the Liberals still endorse cap-and-trade as well. The Green Shift doc makes this clear on page 22. And any and all additional policy laid out in the Carbon Budget from last year still applies, as do any other policy the Liberals have on the books. Looking at this latest policy in isolation doesn’t give a full picture of that party’s policy.

  • I don’t think Dion’s Green Shift is meant to encompass his whole platform. I’d expect all political stripes to have some sort of incentive to retrofit/construction greener buildings. Energy efficient appliances (ban all that aren’t Energy Star approved) too. CBC says Transport Canada has been holding up a BC electric truck manufacturer application for five years while granting license to an American manufacturer in under a month. Fire the department and rehire those who cost smog/asthma along with passenger safety.
    An idea I have is to introduce a land value tax shift among metropolises. Index a land value tax inversely to the distance from downtown, to fight urban sprawl. Downtown property owners get a rebate, the suburbs get another tax. Cities often don’t have the power to tax beyond their borders to capture their commuter populations, so this might not be a civic tax; might require provincial jurisdiction at least. There are ways around this, imposing toll-roads or taxing city-supplied amneties such as water.
    This tax might not be efficient if Transport Canada were allowing electric cars on Canadian roads and hiding behind the straw-man argument they are dangerous. As it is, they probably won’t be mainstream until composite advances make them safe, and skooter and motorcycles are just as dangerous yet legal. I hated Toronto smog. I didn’t feel bad smoking cigarettes for the only time in my life because of the smog. With electric cars Toronto would have less smog. I hope Dion will transform Canada into an exporter of electric vehicles before China captures the SE Asian market. Zenn is still building vehicles in a single garage by hand, no thanks to the feds.

  • I echo the comments of others, the Green Shift is PART of the Liberal plan, it is not fair to view it is the entire plan. The Libs have committed to more renewable power. They have made committments on infrastructure. And one can only assume they have other things which will be part of platform.

    Their document is also clear that there are benefits for lower income Canadians that are not funded by the Green Shift but are part of the mix.

    Lowest income seniors get $600 in Guaranteed Income Support increase.

    Lowest income familes get the $1200 Family Supplement.

    Disabled Canadians get refundable disability credit which is today worth 15% of $6890 so just over $1000.

    So the critique that the shift does not provide for “all the vulnerable” seems to be unfair.

    Who is left out? Well I guess it woud be an able bodied, non-senior with no children. Well we have a labour shortage in Canada and it seems to me that their plan’s increases to the Working Income Benefit and the Employment Credit are all about encouraging people to take work and providing incentives. So if the only “loser” in the plan is someone who can work but won’t work despite added incentives then that is something I think most Canadians can live with.

  • I am not liking your suggestion Stephen that somehow just because somebody is working that they may not be vulnerable. Sounds like a typical Liberal to me. You ever hear of the working poor?

    I am so glad Stephen that you have such a fine grasp on poverty in this country, everyone seemingly falls into a justifiable position for poverty. That is exactly what is wrong with a carbon tax, it never works out the way you think it does.

    Why do we care so much how environmental actions are paid for. Is that what we say when we all seemingly collectively decide to go to war,”can we afford it”. I think not!

    Some kind of tax based system on the public is only only a small part of the future of change.

    I wish we could expand the discourse on this to start including the words deficit financed!

  • I realize this discussion has gone cold, but perhaps someone will glance at it now and then. What I want to comment on is the following comment, by Phillip Huggan: “An idea I have is to introduce a land value tax shift among metropolises. Index a land value tax inversely to the distance from downtown, to fight urban sprawl. Downtown property owners get a rebate, the suburbs get another tax… There are ways around this, imposing toll-roads or taxing city-supplied amneties such as water.”
    I totally agree with the sentiment – that of encouraging density and compact urban development, and all the benefits that entails. However, the suggested strategy is in fact completely counter-productive to achieve this!
    There is a large community of supporters of Land Value Taxation (LVT) – see for example Karl Williams’ essay Land Value Taxation: The Overlooked But Vital Eco-Tax at http://wealthandwant.com/docs/Williams_OE-T.html
    In essence, to combat sprawl, we should apply consistent and high LVT – and only on the land part of a property, not on the built part. This ‘lights a fire’ under landowners to utilize their property to it’s fullest potential. At the same time, by not taxing buildings, you do not penalize people who undertake urban intensification by taxing their product. In urban centres, this means multi-storey, high ground coverage buildings.
    If you instead LOWER the LVT for these central sites, you will simply encourage land speculation – meaning empty lots, parking lots, low-intensity uses, insurance arson, etc. This is not to say that suburban, or out-lying sites should be taxed lower either – they too benefit from having high LVT to encourage land use intensification.

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