Juno News - Ep. 1 ｜ Carbon Tax 101

00:00:00.000 In 2018 the Trudeau Liberals passed the controversial Greenhouse Gas Pollution

00:00:09.840 Pricing Act, which introduced a tax on carbon emissions with the stated intent

00:00:14.580 of mitigating and reversing the human impact on climate change. Whether you

00:00:19.180 want to call it a carbon tax, as the Conservatives and most Canadians do, or

00:00:23.460 quote-unquote price on pollution, as Trudeau prefers, there's no doubt that

00:00:28.320 this has been the flagship policy of the Justin Trudeau government. It has been

00:00:32.320 hotly debated with many economists and Conservative politicians raising concerns

00:00:36.420 that it's nothing more than a tax grab that will hurt the Canadian economy while

00:00:40.620 doing nothing for the environment. For our first episode of our four-part

00:00:45.240 investigative series, Green Hypocrisy, we investigate this tax, take a look at its

00:00:50.560 origins and learn about its effectiveness. Despite being a significant legislative

00:00:55.980 aim of the Trudeau government, many Canadians don't know what this

00:00:59.340 controversial tax actually is, who it is imposed on, or how it works. We learn

00:01:04.800 this by going straight to the source and talking to Canadians.

00:01:07.980 What is a carbon tax and how does it work? I don't know, we don't have an idea.

00:01:12.540 Uh, carbon tax, um, no clue. I honestly couldn't even tell you.

00:01:21.820 I have no idea to be honest. Man, that's a big one. I don't know.

00:01:25.980 So, it turns out that many Canadians don't quite understand what this tax is all about.

00:01:33.020 We figured we'd go to an expert to get a better understanding. Aaron Woodrick is the

00:01:37.900 federal director of the Canadian Taxpayers Federation, a citizens' advocacy group that

00:01:42.780 has been one of the leading voices against the carbon tax. We asked him, what is a carbon tax?

00:01:49.260 It's an additional charge, um, that is based upon the carbon intensity of a product.

00:01:55.020 So, if you buy something like gasoline, which is the obvious example, it just means there's

00:01:59.420 an additional tax, uh, based on the amount of carbon in whatever product that is. So,

00:02:04.540 again, we use gas as the most common example, but it really applies to anything really that's

00:02:08.780 shipped on a truck because trucks use gas. So, it is a sort of widespread new tax, almost similar to

00:02:14.540 a, to sales tax in a lot of ways. And we all know something called the law of supply and demand,

00:02:19.100 which says the more expensive you make something, the less people are going to use it. So, the theory

00:02:24.060 is if you make gas more expensive, people will use less gas. That's good for the environment.

00:02:29.260 Where the theory really sort of breaks down is there's something called elasticity. There are

00:02:33.260 some things that are necessary for people to do. And so, they are likely to continue buying it,

00:02:38.540 even if the price goes up. And things like gasoline are pretty inelastic. So, you know,

00:02:43.500 if you have to drive to work, um, or if you live in a place where there's no transit, you have to pay

00:02:47.900 for gas. So, even if the price of gas is $1 a litre, $1.52, you're still going to do it. So, you don't

00:02:54.700 actually reduce the emissions, but you do increase the cost to use. We also spoke to Dr. Jack Mintz,

00:03:00.620 one of Canada's most distinguished academics in public policy, who currently serves as the

00:03:05.820 President's Fellow of the School of Public Policy at the University of Calgary. Given that his specialty

00:03:11.660 is focusing on Canadian tax policy, we figured he'd be the perfect person to speak to about where the

00:03:17.900 idea of carbon pricing comes from. The concept behind taxing carbon emissions, or GHC emissions,

00:03:24.780 goes back to an Italian economist by the name of Pugu, who had talked about the idea of taxing

00:03:31.740 pollution or what economists will call externalities. The idea isn't to drive production down to zero.

00:03:38.460 The idea is to simply get producers to take into account not only their own individual costs or

00:03:46.620 internal costs of producing product, but also any damage that they cause to the rest of society.

00:03:53.260 That would be the idea of putting on this tax that would take into account that damage. Of course,

00:03:58.940 it requires governments to measure the damage and know what the value of that damage is,

00:04:03.980 and that is not a simple exercise. But that's really where the whole concept really started with.

00:04:10.620 It's important to note, however, that this is not the first time a carbon tax has been proposed in

00:04:15.260 Canada. Stéphane Dion, former leader of the Liberal Party of Canada, predominantly ran on an

00:04:20.940 environmental plan back in 2008. It was known as the Green Shift, and it included a national carbon tax.

00:04:28.460 Endorsed by celebrity environmental activists like David Suzuki, the plan was to tax greenhouse emissions,

00:04:35.660 starting at $10 per tonne of CO2 reaching $40 per tonne within four years, while simultaneously

00:04:43.020 reducing income taxes. Not all, however, were impressed with Dion's plan. One trucking association

00:04:50.220 in New Brunswick pointed out that the tax would jeopardize over 10,000 jobs in the Moncton area alone,

00:04:57.100 and cost the industry another $500 million per year. Similarly, Prime Minister Stephen Harper warned that the

00:05:04.620 Green Shift would threaten national unity and the economy, warning that a carbon tax would be an

00:05:10.700 economic catastrophe for Canada that would plunge the country into a big recession like the one in

00:05:16.140 the early 1980s, while doing nothing but shift more money and more power to Ottawa elites.

00:05:22.220 Ultimately, voters agreed with Prime Minister Stephen Harper and the Conservatives, as they increased their

00:05:27.740 seat count and their share of the popular vote, while Stéphane Dion was forced to resign as Liberal leader

00:05:33.740 after leading the party to one of their worst showings ever. The concept of a tax on carbon is

00:05:40.140 not unique to Canada. It was brought into law in Australia by Labour Prime Minister Julia Gillard in

00:05:46.220 2011. As part of that country's energy reform plan, known as Clean Energy Futures Plan, Gillard wished to

00:05:54.620 reduce greenhouse gas emissions by 80% below 2000 levels by 2050, by taxing carbon, encouraging Australia's 1.00

00:06:02.860 largest emitters to increase energy efficiency and investing in sustainable energy. The carbon tax was

00:06:09.580 a key part of this scheme. However, it did not work out as planned. In 2012, the Sydney Morning Herald, which is

00:06:16.380 Australia's largest and most widely read newspaper, reported that the carbon tax scheme did not defer

00:06:23.180 investment in the coal industry, one of the most notorious polluting resources. In fact, spending actually

00:06:30.060 increased by 62% in one year despite claims by Gillard that it would have had the opposite effect.

00:06:36.700 Australians were skeptical of this tax. There were widespread protests across the country and

00:06:42.140 Australia's Liberal Party, led by Tony Abbott, opposed the tax, claiming it would penalize legitimate

00:06:47.980 businesses, cause job losses and force an increase in energy prices. Abbott made repealing the carbon tax

00:06:54.780 a key part of his platform. Similar to Canadians' opposition to Stéphane Dion's carbon tax, this gamble paid

00:07:01.980 off and Tony Abbott's Liberals formed government, defeating the Labour Party and proceeding to scrap the

00:07:07.260 carbon tax the very next year. What we've seen in Canada is that governments are using regulations and

00:07:14.780 subsidies to a large extent because carbon taxes are not leading to emission reductions. And that's not

00:07:21.100 surprising because carbon taxes cannot guarantee emission reductions. The economists might estimate

00:07:28.300 that it will lead to some emission reductions, but that's a lot different than saying actual emissions

00:07:33.580 fall because it's not just the carbon tax that might influence emissions. It also depends on the state

00:07:39.740 of the economy, whether the economy is doing well and you have growth in the economy etc etc. And so we're

00:07:45.500 now seeing a whole of the thora of different regulations coming in, such as trying to stop resource

00:07:51.660 development, clean fuel standards, or building retrofits etc etc. And we're also seeing subsidies being brought in.

00:08:00.220 Some of the subsidies like ethanol production and electric car vehicles having a very high carbon price

00:08:06.860 per tonne of reduction in carbon. And so what we are actually seeing unfortunately is all these different

00:08:16.700 policies and then we're just heaping carbon taxes on top of them. It's unfortunately turning more into a tax

00:08:23.260 drag and now being funded to either provide rebates or go into public services now or the general budget of the government.

00:08:32.860 It isn't just policy experts like Dr. Jack Mintz that think this carbon tax is not only unhelpful to the

00:08:39.020 environment but also damaging and destructive to our economy. Premier Doug Ford in Ontario and Premier

00:08:45.900 Jason Kenney in Alberta were both elected running openly opposed to Justin Trudeau's carbon tax with a plan

00:08:53.820 to take it to court in an attempt to recognize that it is unconstitutional for interfering in provincial jurisdiction.

00:09:01.500 We cannot afford the risk of a carbon tax recession because the truth is clear you can be for a carbon tax

00:09:10.460 or you can be for jobs but you can't be for both. We had a cold winter this year many families were paying

00:09:18.780 an effective carbon tax of 75 or 80 percent on gas to heat their homes. We have small businesses putting

00:09:25.980 online carbon tax bills of 800 or 1200 dollars a month this is really hurting our economy and you know

00:09:33.420 it's all just a cash grab. The Canadian Taxpayers Federation has been one of the leading voices against

00:09:39.260 the carbon tax citing how it disproportionately hurts rural Canadians and believing it just makes life more

00:09:45.820 difficult for families and businesses while again not really helping the environment. If you live in a large

00:09:51.740 city if you don't own a car if you can get around without a vehicle if you work at a job that doesn't

00:09:57.500 involve any types of inputs that that are carbon intensive you can benefit from this you can definitely

00:10:02.860 be better off. If you live in a rural area if you have no choice but to drive if you work in an industry

00:10:07.820 like agriculture that uses a lot of intensive carbon intensive inputs you are probably going to be worse

00:10:13.740 off and you know the the rebate makes up for some of that but it does not contemplate a lot of scenarios

00:10:20.780 and people you know they're they're the cost of energy for them cost of gasoline alone a lot of cases

00:10:26.860 is just it just goes through the roof so it really hits people very differently depending on your lifestyle

00:10:32.460 and and what you what line of work you're in. Our constitution lays out which level of government has

00:10:38.300 what powers and something like climate change as you can imagine in 1867 was not an issue so when

00:10:44.300 they drew up our constitution it's not covered clearly so the debate is who has the power to do

00:10:49.420 this is it Ottawa or is it the provinces and the arguments that the province has made is the nature of

00:10:55.260 this power is more similar to things in the provincial column of jurisdiction than the federal and so

00:11:01.900 their argument is Ottawa actually doesn't have the power to do this we just last week we're at the

00:11:06.700 Supreme Court will have the final say on this so they're going to have to try and reconcile these

00:11:11.180 competing rulings it's actually quite remarkable um it's it's quite divided courts are quite divided on

00:11:17.180 this there were 15 justices in the three provinces that looked at this eight of them ruled that it was

00:11:22.780 constitutional and seven of them ruled it was unconstitutional so it is quite uh you know there's

00:11:27.660 quite a bit of division in courts over this issue. If policy experts like Dr Mintz and advocates like

00:11:33.820 Aaron Woodrick are right that this tax hurts Canadians then who really benefits from this?

00:11:39.660 At the federal level the federal government brought in the carbon tax where rebates are given to

00:11:44.780 households uh very little to businesses by the way and so it helps deal with households in terms of

00:11:51.500 at least on average households actually are maybe even a little bit better off because they're

00:11:56.220 getting some of the subsidies that probably should go to businesses to deal with export and import

00:12:02.300 competitive pressures. Approximately 2.6 billion dollars is collected from the carbon tax but where

00:12:09.420 does this money actually go? According to a 2020 report by the parliamentary budget officer about 90

00:12:16.540 of the revenue collected from carbon taxes which equals about 2.34 billion dollars is recycled through

00:12:23.180 household rebates. Another 10 percent of the revenue collected from the carbon tax which is about 260

00:12:29.820 million dollars is used by the government to fund green energy projects and other projects that do

00:12:36.220 little to help improve Canada's environment. We'll be looking at these programs in more detail in a later

00:12:41.980 episode. And as is the case with most government taxes and regulations some of the largest emitters

00:12:48.780 actually benefit from the way the existing national tax is imposed. It turns out loopholes created by the

00:12:55.260 Trudeau government allow businesses to receive rebates that means that they pay no carbon tax at all.

00:13:01.900 So while everyday Canadians are being punished for just doing their day-to-day activities

00:13:06.700 some of the biggest corporations get off scot-free. Despite overwhelming evidence suggesting that the

00:13:12.220 carbon tax doesn't really help the environment and it really doesn't help the taxpayer, Prime Minister

00:13:17.500 Justin Trudeau is doubling down. If you thought one carbon tax was bad enough, get ready for the Trudeau

00:13:23.580 government's second carbon tax. In the middle of the coronavirus pandemic, while unemployment numbers

00:13:29.740 reached historic highs and while the energy sector continued to struggle, Trudeau pushed forward the

00:13:35.740 introduction of the Canadian Fuel Standard, a regulatory regime that will require all suppliers of fossil

00:13:42.860 fuels to reduce their carbon content. Yes, it's basically a very bureaucratic way of saying another carbon tax.

00:13:50.780 They are bringing in what we're essentially looking at as a second carbon tax called the Clean Fuel

00:13:55.340 Standard and it's essentially like the carbon tax but hidden and much more expensive with no rebates.

00:14:02.700 So it's basically even worse. I think they've lost the plot on this policy and they're sort of

00:14:09.980 scrambling to make up for it and I worry that the result is just going to be a huge cost for Canadians.

00:14:15.980 This new tax grab will cost between $150 and $180 per tonne of carbon emissions.

00:14:23.180 By comparison, the first carbon tax is capped at $50 a tonne.

00:14:27.820 The new carbon tax will be even more expensive and more devastating to Canadian business owners

00:14:32.700 and Canadian taxpayers. Meanwhile, the government will continue to lecture us about climate change.

00:14:39.420 As documented in a 2020 Fraser Institute report that analyzed the carbon pricing schemes in 31 OECD

00:14:46.460 countries, most governments are using carbon taxes as revenue-raising tools rather than a mechanism to

00:14:53.500 internalize the negative externalities of emissions in a cost-effective manner.

00:14:59.100 Carbon taxes are meant to replace all other climate-related regulations. However, the results show that no

00:15:05.580 high-income OECD country has used carbon pricing to repeal emissions-related regulations but instead

00:15:12.700 have introduced new regulations alongside carbon pricing systems. So where are we going with all

00:15:19.340 these regulations, taxes and government interventions? There are people on the left of course who might

00:15:26.300 argue actually that carbon taxes won't be sufficient to reduce emissions and they would like to see much

00:15:34.620 bigger actions taken. That would be regulations or whatever that would actually force emissions

00:15:41.740 down faster and more quickly and also some people on the left look at this as an opportunity to

00:15:47.580 reorganize society, although that really goes well beyond the greenhouse gas emission agenda.

00:15:54.300 In our next episode of Green Hypocrisy, we'll be looking into the promises and failures of the global

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Juno News - November 19, 2020

Ep. 1 ｜ Carbon Tax 101

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