Canadian Carbon Taxes: A lesson in politics overwhelming policy

Canadian Carbon Taxes: A lesson in politics overwhelming policy
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The current Canadian carbon tax debate is a chilling illustration of how easily political spin can overwhelm serious debate on a complex public policy issue.

Canadians in two jurisdictions are currently grappling with a carbon tax. In British Columbia, citizens are 10 days away from actually starting to pay a tax imposed by the provincial government – and nationally, Opposition Liberal Party leader Stephane Dion, inset, has just released a wide-ranging climate change policy proposal that includes a carbon tax.

The problem, in both instances, is that the facts of the tax – and the underlying policy consideration it was conceived to address – have been lost in a chorus of simplistic political rhetoric.

That was predictable. From the days when we were all trying to read the lips of George Bush Sr., it has been an article of faith that taxes are bad and new taxes are the worst. It was inevitable that if someone tried to follow the advice of the most progressive energy economists by instituting a carbon levy, the knee-jerk crowd would kick up a fuss. For a representative sample, check out this video of Canadian Prime Minister Stephen Harper responding to the Dion announcement.

Two things have been interesting and, perhaps, less predictable in Canada. First, the (courageous) politicians who proposed these new measures have constantly focused on something other than global warming. In B.C., especially, the right-of-center government has reacted in apparent embarrassment at having suggested that some taxation is appropriate and necessary. Instead of aggressively selling their plan on the basis that intelligent climate change policy is urgently needed, B.C. Liberals have chosen to focus almost exclusively on a series of tax cuts they have included as part of a promise to keep the carbon tax revenue neutral. The headline on their webpage reads: “The BC Carbon Tax: Lowering Taxes, Protecting Our Environment,” – as if lowering taxes was the primary goal.

(Who thought this up? And why didn’t they market-test it? Any pollster or focus group could have told the Liberals that you might well convince the public that a tax could be revenue neutral, but you’ll never convince anyone that the purpose of a new tax is to lower taxes.)

The other interesting and slightly surprising reaction has been the pitched (and sometimes irrational) opposition from the left-leaning New Democratic Party (NDP). It’s possible that the NDP‘s anti-carbon tax position could arise partly because of the strong representation in the party of organized labor – by the kind of once-well-paid union workers who are angry about losing their jobs at recently closed truck plants in central Canada. Like the board members at Exxon Mobil, these are people who go to bed every night hoping that the whole climate change conversation will have ended by morning.

But the NDP‘s opposition is even more perverse in British Columbia, where the issue has sparked a role reversal. The BC Liberals are usually liberal in name only – unaffiliated with its federal namesake, this party is the kind of West Coast Republican coalition that supports Arnold Schwarzenegger in California. Up till now, Premier Gordon Campbell’s BC government has cut taxes more aggressively than any administration in provincial history. The New Democrats, on the other hand, are tax-and-spend liberals in the grand old tradition. When they were driven from power in 2001, they had created a B.C. tax regime that was among the most expensive in Canada.

Now, the Campbell Liberals are slapping on a new tax and the New Democrats are parading around like the newest members of a Milton Friedman club, running an “axe the tax” campaign and offering, as an alternative a “Framework for Real Climate Action.” Aside from a series of general complaints about the Liberal environmental record (much of which is fair criticism), this document offers mostly platitudes in answer to the Liberals’ very specific anti-carbon measures. The NDP say they would do better, while still decrying this important first step. They say, laughably, that the Campbell plan “undermines the pan-Canadian
approach that we need for … meaningful action,” as if the federal government of Conservative Prime Minister Stephen Harper has any intention of cooperating in even the most modest efforts to rein in Canada’s production and use of fossil fuels.

This seems unhelpful on two counts. The Liberals, who deserve full praise for taking a position that is, at this moment, the most progressive on the continent, have a huge lead in the polls and the environmental high ground. Why skulk around dodging the climate change topic?

As for the NDP, even if they inflict political damage on their rivals, no anti-tax voter is ever going to switch sides to a party that is, on every other issue, anathema to their beliefs. Even worse, the division between labor lefties and environmentalists has already hobbled the NDP‘s electoral success. With the rise of the Green Party in B.C., the NDP looks to be running a permanent 10+ per cent deficit in the popular vote. Far from playing the anti-tax card, you would think that the NDP might be trying to shore up its environmental credibility to tempt back those green Green voters.

And speaking of the Green Party, the national version, under leader Elizabeth May, appears to have found a more thoughtful and positive line of carbon-tax criticism. While encouraging the baby steps proposed on June 19 by Liberal leader Stephane Dion (a $15-billion tax shift), May preempted the Liberals on June 18, with a proposal to shift $40 billion in taxes. May points out the inadequacy of Dion’s measures without blocking what is currently the best national plan on offer. Of course, Dion and May are already known to have a warm relationship: each has promised not to run candidates in the other’s riding during the next election.

On this occasion, Dion says:

Our plan is as powerful as it is simple. 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.

May says:

The principle behind a carbon tax is simple: stop taxing what we want and start taxing what we don’t want.”

It’s almost as if they’d been planning this together.

The one other element of this story that creates a problem for a chronically confused public is the tendency on the part of media to cover the political tactics of the “environmental debate” without actually saying much about the environment or about the policies intended to address it. This Globe and Mail story, for example, is full of analytical spin about Stephane Dion’s likely political motives for announcing his GreenShift carbon tax plan. But nowhere does the writer ponder whether Dion might have created the plan because climate change is a problem that any responsible leader would be honor-bound to address, whatever the political consequences.

That might be a point worth reporting. B.C. Premier Campbell and Liberal leader Dion have taken only the smallest of steps here. But they are steps in the right direction. They demonstrate the kind of political courage and directness that everyone always says they want, but voters too often reject at the polls.

With the odd exception (Jeff Simpson, for example), such courage and directness is as hard to find in the media as it is in the halls of political power. Both Campbell and Dion should be proud of their positions and present them without apology. And anyone who does not have an immediate ability to implement something better should cheer them on.

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