![[Conservative Party ad on Stephane Dion's carbon tax]](http://www.canadiancapitalist.com/images/2008/dion_carbon_tax.jpg)
Talk about a pot calling the kettle black! The Federal Conservatives are running ads on radio slamming Stephane Dion’s, yet-to-be-unveiled, carbon tax calling it a “permanent new tax on everything”. Despite Mr. Dion’s claim that the proposed tax will be revenue-neutral, the Conservatives are claiming that Canadians will end up paying an extra tax on the cost of gas, electricity and everything else that we buy. They should know all about a trick like that — they did precisely the same thing with the “ecoAUTO Rebate Program”.
In Budget 2007, the Tories introduced “a broadly revenue-neutral” rebate program that offered up to $2,000 for the purchase of a new fuel-efficient automobile while at the same time imposing a “green levy” of up to $4,000 on gas-guzzling vehicles such as SUVs (but not trucks). In this year’s budget, they decided to scrap the green rebate, while keeping the green levy. It is hypocritical of the Conservatives to warn that we “better not fall for this trick”, when they themselves played a similar green trick on Canadians.
Note: Before Tory supporters pelt me with hate mail, let me state that I voted for the Conservatives in the last election and we don’t show much partisanship when heaping abuse on politicians.
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17 responses so far ↓
1 Rob G // Jun 11, 2008 at 2:00 am
FLAT TAX…. how about that! Everybody pays the same, businesses and people. Just add up all the money we need with a bit of a surplus (which then would be invested as the Norwegians do) and then go: people get paid this much in total and business bring in this much therefore everybody pays this amount.
2 Robillard // Jun 11, 2008 at 3:16 am
The Thatcher administration tried to institute a system of fixed taxes to fund local government in 1989 called the poll tax. It sparked a tax revolt and helped lead to Thatcher’s resignation the following year. Fixed taxes have the advantage of not creating a disincentive to working, i.e. expanding one’s income, since the marginal rate is effectively zero. A fixed tax sounds like a good idea until it meets political reality. Lots of people, particularly those with lower incomes, do not consider such a tax to be fair.
In general, despite the supposed progressiveness of the Canadian tax system, Canadian tax payers of all income levels bear roughly the same tax burden. Poor people pay a larger percent of their income in consumption and indirect taxes. Rich people pay higher income taxes. It’s not clear how the burden of a potential carbon tax would be spread across society, but it would at least incentivise people to consume less carbon-inefficient products and services.
3 Anon // Jun 11, 2008 at 9:06 am
What matters is that a carbon tax would increase prices on pretty much everything, so what the conservatives are saying is true. Maybe some will want a carbon tax anyways, but that’s a different debate.
As for the green levy, I can’t help but thinking that if they had scrapped it, they would get tons of abuse from the all the environmental groups.
4 Abe // Jun 11, 2008 at 9:19 am
CC
I have 2 words for you.
Right on.
5 TonyR // Jun 11, 2008 at 9:37 am
It’s the same as booze/tobacco taxes: Higher taxes = less consumption = healthier people (or planet). 90% of Canadians aren’t going to change their ways without someone using a stick or a carrot.
6 Canadian Capitalist // Jun 11, 2008 at 10:05 am
Rob G, Robillard: In a society with a lot of income inequality, flat tax will be socially divisive and a bigger burden on lower income families and individuals. I don’t see how all income levels have the same tax burden. Lower income families get transfers such as the GST rebate to offset some of the consumption taxes.
Anon: It’s true that scrapping the Green Levy would have attracted criticism but they could have extended the rebate program for a longer duration.
TonyR: The problem with stick and carrots (whatever the colour of the government) is that somehow carrots have a way of disappearing but the sticks seem to stick around forever.
7 Traciatim // Jun 11, 2008 at 11:12 am
CC, I think the Levy and the Rebate both perform the same function and are therefor not needed to both exist. The purpose was to change behaviour through monetary incentives. That purpose is served by the levy on wasteful vehicles.
I don’t want to comment too much on the carbon tax grab since we don’t know the details yet, but I will note that it will make the cost of food go up. Much like extending the GST to food would. If the plan was simply to extend the GST to also be included in food prices there would be a huge uprising against it, but if you greenwash the plan under false pretenses of saving the planet (which it will have no effect on) then suddenly people contemplate it.
8 Rich // Jun 11, 2008 at 11:29 am
I would prefer to pay more to park my car than pay a tax. If I can’t park it economically I won’t drive it. The hypocracy of the Harper government, does not bother me one bit, and if it bothers you I suggest you pay closer attention to they way Canadian politics works. All parties do it!
When viewing Canadian Politics, I might suggest we all do it from 10,000 feet way in order to see the big picture. The details will make one gag.
9 ThickenMyWallet // Jun 11, 2008 at 1:23 pm
It is too early to comment on Dion’s proposals but never under-estimate politicians of all political stripes to become used-car salesmen when trying to get a complicated point across.
However, markets hate uncertainty and most governments are blowing it on the environmental file. The President of Sheritt International stated at the last annual shareholders meeting that all he wants is some clear guidelines on how to deal with carbon emissions (good or bad). Then, he can make the proper and informed decision. All we have now, other than B.C., is a bunch of pie in the sky, hogwash about emissions targets 30-40 years out with vague, weasel words and code. Just give us a damn, easy to follow, framework- good or bad- and we can make adjustments.
As also pointed out by a columnist, politicians either do nothing or too much. If they sat on their hands and let gas prices rise, the market would adjust accordingly. Look at all the talk about regulating SUV’s in the 1990’s. Now the market is gone and the government didn’t have to do anything.
Politicians- I tell ya…
10 Warren // Jun 11, 2008 at 3:53 pm
I didn’t vote Conservative but I had some hopes for them when they came into office. A fresh face from the Liberals who did some good things in office but just got too corrupt for their own good.
That being said, they ruined it right out of the gate with the Income Trust tax debacle. It was obvious to most economists that these vehicles couldn’t continue to exist, so why lie? Oh ya, vote buying.
This is another kick in the balls. I got a $1000 rebate for my 2007 Yaris, and it factored into the decision making. I think it was a great idea… and “revenue neutrality” or something close to it is welcome.
I live in BC, so we’re getting the carbon tax shortly, but first I’ll get a $100 rebate ($200 total with my girlfriend). Combined with lower income taxes, this will more than offset the tax we will pay on gas for the Yaris over the next 12 months. Factoring in the increased cost for food and whatnot is more complex.
Regarding tax methods, income tax has the biggest economic detriment. I’d love to see the GST raised to 10%, and the equivalent tax break applied to income tax in the form of a higher basic exemption. It would encourage work and savings.. but clearly political suicide.
11 Christine // Jun 11, 2008 at 6:29 pm
My only comment is that I am sick to death of the Conservatives still needing to undercut Liberal policies. If they were actually doing a great job governing, they wouldn’t need to continue to harvest votes when they’re supposed to be running the country. I want action, not political partisan bickering.
12 Robillard // Jun 12, 2008 at 11:31 am
CC, the tax burden is flatter burden is flatter than you think when you consider the effect of payroll taxes, such as EI and CPP/QPP (which are borne primarily by the worker), the flow-through effects of corporate taxes (which accrue to households in the form of higher prices, smaller dividend disbursements, slower capital accumulation, decreased spending on labour and other deadweight loss) and excise taxes on certain goods such as gasoline and cigarettes. I didn’t mean to say that the tax burden was shared equally across all income groups. It’s just that the system is only mildly progressive.
A person with a $25,000 income may only pay an apparent income tax rate of 10.8%, but if he spends all his remaining earnings, he pays maybe around 12% more in sales taxes. The apparent tax rate also ignores CPP and EI paid by both he and the employer. The employer’s portion flows through to worker in lower gross pay. After accounting for that and any of his spending on goods subject to excise taxes, the person’s tax burden is probably close to or over 30% of income.
High income earners spend less of their income and save more, so the burden of sales taxes is lessened considerably. Also, CPP and EI start declining as a percentage of income above a certain point.
13 Pushing Thirty // Jun 12, 2008 at 10:06 pm
CC, great topic - definitely one we should all explore further. I have to agree with many of the readers that a fixed tax hurts those in less fortunate situations more than those with a higher income. At the same time, I am not opposed to carbon or any other environment related taxes but do wish to see the corporations pay the majority of the bill. Especially those in Alberta. And yes, I live in Alberta.
And a question for Warren…the $1000 rebate on a new Yaris, is that a one time deal? What if you sell it six months later and get a half ton truck? Just asking.
14 Warren // Jun 12, 2008 at 10:29 pm
Its a one time deal, new vehicles only. You don’t even have to buy, a 1 year lease qualifies(!). If I bought that 1/2 ton new I’d be paying $1000 extra and then some though.
15 Traciatim // Jun 13, 2008 at 6:51 am
Hey Pushing Thirty, you say you aren’t opposed to a carbon tax as long as corporation pay for them. Are you aware that corporations don’t really pay corporate taxes, they are simply factored in to the prices of their goods and services making them more expensive?
Since the two largest anthropogenic greenhouse gas emission sources are energy and food, a carbon tax will significantly increase the cost of home heating, home cooling, and eating. Is that really what you want to see?
I mean maybe you have a severe hate on for disabled people, seniors, and others on fixed incomes but I think that plan stinks.
16 Pushing Thirty // Jun 13, 2008 at 8:52 pm
Traciatim, wow…your response has stunned and almost left me speechless. There is a lot of anger in your writing. I have no hate on for anyone. I was merely responding to an interesting post by CC. Perhaps you should reread what I wrote. Best of luck to you.
17 Traciatim // Jun 14, 2008 at 8:00 am
I hope it has made you think about your actions when voting. Supporting a tax grab that specifically targets energy and food is not OK.
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