The Green Version of the Tax Shift
Now that Elizabeth May is set to join in the televised election debates, her party’s platform will come under greater scrutiny. There is much to like in it – especially a major investment program in energy efficiency, alternative energy, public transit and so on. Her commitment to seriously dealing with climate change and creating a new economy and new jobs in the process is not in question.
That said, I find the Green Tax Shift part of the program outlined on their web site highly questionable and, indeed, slightly weird.
The Greens support moving on two fronts at once – imposing caps on large industrial emitters, and implementing a carbon tax which would apply to household consumption. At $50/tonne, their carbon tax plan would immediately raise gasoline prices by 12 cents per litre. Harper and Layton should have fun with that one.
Precisely how the revenues from the carbon tax would be recycled is considerably more opaque than under the Dion plan, but some clear commitments are made.
A seemingly large chunk of the proceeeds will be directed to income splitting for working age families for tax purposes, extending the income splitting for seniors introduced by Flaherty. Erin has blogged relentlessly on the regressive nature of such a plan, which shifts income into the hands of the spouse with the lower tax rate and most benefits high income families with a single earner.Â The Green Party’s own numbers show an incomeÂ tax saving of $4,757 per year for an “upper middle class” family with a single earner making $140,000 per year, and no income tax saving at all for middle class working families with two earners in the same income bracket.Â The Greens do promise to eliminate all incoem tax for those making less than $20,000.
I suppose there may be an environmental case to be made for supporting stay at home spouses in high income families, but exactly what it is is unclear to me.
The Green Party further promises cuts in payroll taxes – for EI and CPP – as part of their tax shift plan. They say they will cut employer premiums, but puzzlingly show the savings will be gained by families as well as by employers. Even more mysteriously, they show payroll tax savings for an unemployed worker.
If someone can fathom what is going on here, let me know.
I suppose the EI and CPP could be tweaked so there is a direct carbon tax transfer to maintain benefits, but I don’t see this stated, and both programs are now premised on a symmetry of payroll taxes and program benefits.