The Federal Liberals unveiled their Green Shift Plan today:
We will cut taxes on those things we all want more of such as income, investment and innovation. And we will shift those taxes to what we all want less of: pollution, greenhouse gas emissions and waste. We need to make polluters pay and put every single penny back into the hands of Canadians.
The plan proposes to tax greenhouse gas (GHG) emissions at $10 per tonne immediately and rise by an additional $10 per tonne each year until it reaches $40 per tonne within four years.
To offset the GHG tax, the Liberals propose broad-based income tax cuts. The lowest tax rate will fall to 13.5% from 15% and the middle brackets (currently 22% and 26%) will see a cut of 1%. They also propose a new child tax benefit worth $350 on top of all existing benefits but plan to replace the $1,000 employment credit (worth $150 today) with a $1,850 refundable employment credit for Canadians earning less than $50,000 per year. Also, Mr. Dion also plans to enhance the Working Income Tax Benefit and make the Disability Tax Credit refundable. Corporations and small businesses will see a 1% cut in the tax rate.
The Green Shift book claims that at $40 per tonne the average direct cost to a household will be approximately $250. The Green Shift website has a calculator that can be used to estimate the tax savings.
Mr. Dion’s plan is certainly a bold political gamble, especially at a time when Canadians are paying more at the pumps and at the grocery store. It is unclear to me how the plan will cost an average family only $250 but the tax savings accruing to every household with an income of up to $100,000 ranges from $420 to $2,700. How can it be revenue-neutral unless it comes out of someone’s pocket? And who is that unfortunate person or family who will be paying more?