Make It Revenue Neutral

In our submission to the Alberta Climate Leadership panel chaired by Dr. Andrew Leach, we called on the panel to recommend “the most effective and economically sound approach to emissions reduction: a revenue-neutral carbon fee.”

When the Climate Leadership Plan was released last November, we stated clearly in an op-ed in the Calgary Herald that Alberta’s “plan should be made fully revenue neutral,” meaning “any revenues raised by a new tax or fee are fully offset by reducing other taxes or fees.”

And in another op-ed in the Edmonton Journal last spring, just prior to the Government’s budget, we stated that “The government has a choice: return all money back to Alberta taxpayers, or, use the funds to increase government spending. Unfortunately, the government has signalled its preference to spend.”

So Canadians for Clean Prosperity has been clear all along in calling for a revenue neutral carbon tax, and we have not fully supported the Alberta carbon price plan for precisely this reason.

The report that Premier Notley quoted from in the legislature commissioned economic modelling which looked at the implications of applying various pricing models on a national basis. While it did indeed conclude that a national carbon pricing plan based on Alberta’s model of carbon pricing could reduce emissions without hurting economic growth, and that Alberta’s proposed Output Based Allocation system for large emitters could reduce impacts on competitiveness, our research findings were premised on revenues from carbon pricing being returned as tax cuts. The same study also showed that spending money on environmental efficiency and clean energy projects, instead of returning revenues as tax reductions, would result in reduced economic growth while only slightly increasing emissions reductions. Our conclusion was that “an Alberta-style hybrid carbon pricing policy, and recycling the revenues by reducing personal and corporate income taxes, represents the best way forward for Canadian governments.”

Therefore, while it is fair to say we like the design principles of Alberta’s proposed carbon pricing system, we have consistently criticized the government’s failure to make their system revenue neutral.

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