Raising the carbon tax makes more sense than you might think

Originally published by Canada’s National Observer

The first time I heard the phrase “carbon tax,” I admit that I was confused. I had a sense this was a policy to help protect the environment, but I couldn’t have told you anything beyond that.

I thought of myself as someone who cared about environmental issues, but I was also busy running a small business and trying to figure out how to be a father to a new baby. I wasn’t thinking about climate change, let alone climate policy.

A few years later, my thinking started to change. I began seeing the impact that extreme weather was having on the farmers who supplied my company, and it made me think about the world my son would inherit.

I began reading about climate change, and it was like a punch in the gut. I had no idea we were putting ourselves in so much jeopardy by warming the planet.

My first instinct was to change my own behaviour. But it didn’t take long to see that turning down the heat in my house wasn’t going to solve the problem, while change on a bigger scale would require government policy.

In my search for solutions, I kept reading about carbon pricing. The vast majority of experts — climate scientistseconomists, concerned citizens — all agreed it was the lowest-cost way to tackle climate change. Their arguments made sense to me.

As the owner of a small food delivery business, carbon pricing appealed to me because it’s a market-based solution to climate change. It gives people and businesses the freedom to choose how to reduce their emissions — it doesn’t impose solutions on them with regulations. Carbon pricing offers a solution to the climate problem that allows people to transform the economy themselves, rather than re-engineering it from above.

Today, I’ve switched to working full time as an advocate for smart climate policies.

When the federal government recently announced it was increasing the “price on pollution” — the carbon tax — I assumed many Canadians were still mostly in the dark about how it works, as I was just a few years ago. So, here’s what I think they should know.

First, carbon pricing is affordable. I know it doesn’t sound that way — how can tax increases be affordable during trying economic times? But the carbon tax is the only climate policy that sends money back to all Canadians to compensate them for the extra costs they face.

Yes, gas prices and home heating bills will go up. That will understandably be a concern for many people, especially in this downturn. But the majority of Canadians, especially lower-income households, will receive more money in rebates than they pay in carbon taxes.

By 2030, a typical family of four in Ontario will receive over $2,000 per year in quarterly carbon rebates. That money will offset higher fuel costs or help people invest in reducing their carbon footprints.

The bottom line is this: If you reduce your carbon output, you’ll pocket more of your rebate and come out further ahead. If, over the next 10 years, you can’t switch to an electric car or make your home more energy efficient — or if you don’t want to — then nothing will change. The rebate will cover the costs of the tax.

When Canadians learn about the carbon rebates, they overwhelmingly support the policy. For example, a poll my organization released in September found that two-thirds of people in Ontario’s 905 region support carbon pricing when they understand how it works.

The second thing you should know about carbon pricing is that the alternatives are more expensive, and they don’t include a rebate. Once you accept that doing nothing about climate change isn’t an option, you’re only left with two alternatives to carbon pricing: regulation and spending.

Regulating our way to a solution would be cumbersome and costly. Relying on spending to reduce emissions would add billions of dollars to an already ballooning debt. The Ecofiscal Commission, an independent group of Canadian economists assembled to study the issue, found that even the best alternatives to carbon pricing would cut $1,200 from Canada’s annual per capita GDP by 2030.

The third thing to know is that carbon pricing is the best way to support the technologies we need to solve the climate change problem.

For example, we already have the ability to capture carbon dioxide from the smokestacks of industrial facilities, like steel mills and power plants. But it’s expensive. A rising carbon price gives businesses the incentive to make that investment. Why pay carbon tax when it’s cheaper to capture your carbon pollution?

Reducing their emissions also helps businesses compete in a global marketplace that is increasingly demanding lower-carbon products. That’s one of the reasons that business groups like the Canadian Chamber of Commerce and the Mining Association of Canada, as well as many oil and gas companies, are in favour of carbon pricing.

It makes me sad that taxing carbon has become a partisan issue in Canada. Carbon pricing was invented by conservative economists, but it isn’t exclusive to any one political party. You don’t need to support Prime Minister Justin Trudeau to support a carbon tax. Instead, you can tell your party of choice to come up with an even better version of the policy.

For example, my organization is advocating more support for rural residents and small businesses to help them manage the effects of the tax. Some conservatives have called for converting the carbon rebates into income tax cuts.

Nobody likes paying more taxes, even if they’re rebated back to you. But Canadians expect their leaders to address climate change. And the facts are clear — there’s no better way to address climate change than through carbon pricing.

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