Why a Carbon Tax?

Carbon taxes are the most efficient and effective way to reduce carbon emissions and help us avoid the worst impacts of climate change. 

Steadily rising carbon prices smooth the challenging transition to a global post-carbon economy—the kind of economy we must create in order to stabilize the climate. 

Carbon pricing sends a powerful signal across an entire economy to reduce its carbon footprint, and unlocks the zero-emissions technologies we need.

And it achieves these objectives without harming the economy. 

Putting a price on carbon pollution just makes sense. Disposing of almost any other kind of harmful waste incurs a cost, so why shouldn’t there be a charge for dumping greenhouse gases into the atmosphere? 

Don’t take our word for it: examine the evidence.

It’s low-cost

A price on carbon lets people choose how to respond—those with the easiest and cheapest ways of reducing their emissions will take action. Flexibility is what makes a carbon tax the lowest-cost way to reduce emissions. 

Without carbon pricing, the government would need to rely exclusively on regulations and subsidies to cut greenhouse gas emissions, which is less efficient and more expensive. If regulations and subsidies are pushed far enough to reduce emissions significantly, they would cost Canadians too much, and damage the economy.

It returns revenue

A carbon tax has another benefit over regulations and subsidies: it generates revenue that can be returned to Canadians as rebates or income tax cuts. The federal carbon tax is required by law to return all revenues to the province where they were collected. Most families (typically lower and middle income families) will receive more in rebates than they pay in carbon taxes.

It’s effective

Carbon emissions are a part of almost any economic activity—from driving a car to making concrete. A carbon tax puts a price on carbon pollution across the economy so that everyone has an incentive to reduce their emissions. Other policies don’t cover the whole economy.

It’s simple and transparent

A carbon tax is easy to administer—the government collects the tax from fuel producers or distributors and the rest works itself out. This means there’s no expensive government oversight required, and less likelihood of special interest groups getting exemptions.

It encourages innovation

A steadily increasing price on carbon encourages innovation. Companies will invest in new technologies to lower emissions if it saves them from paying the carbon tax. Drivers become more likely to switch to a lower-emission vehicle next time they purchase a car. Homeowners become more likely to install a smart thermostat if they know they will save money on heating costs. Builders become more likely to install geothermal heating, solar panels, or high-efficiency insulation.

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