A new federal election campaign ad released by the Conservative Party of Canada is sparking accusations that it represents an attempt to deceive Canadians about the costs associated with the Liberal Party’s carbon tax.
“This is a new level of dishonesty,” says Michael Bernstein, executive director of Clean Prosperity, a non-profit organization that supports market-oriented solutions to climate change.
“It’s a real shame that the Conservatives are using a dishonest approach to discuss climate policy, including the most effective tool that we have: the carbon tax.”
The federal carbon tax was imposed earlier this year in Saskatchewan, Manitoba, Ontario and New Brunswick (because those provinces did not have their own carbon-pricing systems).
The Conservatives’ video ad claims the Liberals’ carbon tax will increase the cost per litre of gasoline by 22.5 cents (plus HST). In reality, the Liberal’s current plan would only increase the cost by 11 cents per litre by the year 2022.
Clean Energy Canada is also accusing the Conservatives of misrepresenting its research — the ad cites the British Columbia think tank as one of its sources. Dan Woynillowicz, policy director for Clean Energy Canada, says their numbers were taken out of context.
When asked to explain the numbers in the video ad, a Conservative Party spokesperson noted that the Liberals have committed to hitting Canada’s emissions targets under the Paris climate agreement and a report by the Parliamentary Budget Officer estimates that the current carbon tax would need to be five times higher (the equivalent of 22.5 cents per litre of gasoline) if Canada is to meet those targets.
However, that estimate was based on a hypothetical assumption that the government would rely solely on a carbon tax in order to lower emissions, which none of the major political parties is proposing.
While the Liberals, NDP and Green Party support a carbon tax system, Conservatives Leader Andrew Scheer has pledged that his first act as prime minster would be to scrap the tax.
Some economists say the most troubling part of the Conservative’s message is its misrepresentation of the carbon tax as a policy that will ultimately cost the majority of Canadians money.
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“On net, there actually isn’t an increase in the tax burden to Canadians,” says Craig Alexander, chief economist at Deloitte Canada. “If you want to put a price on carbon and reduce its emissions but you don’t want to have a significant impact on the economy, you need to then rebate and refund all of the money that’s collected back into the local economy.”
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That’s what the current carbon pricing system is designed to do. The program is meant to be revenue neutral (90 per cent of revenue raised is returned to taxpayers through rebates) and the Parliamentary Budget Officer estimates that 70 – 80 per cent of Canadian households actually stand to make money.
The approximately 20 per cent who are required to pay more are likely to be wealthier Canadians with bigger homes or larger vehicles, according to the government.
For example, a federal government report found the average household in Manitoba will pay around $232 more this year for natural gas — but that same household is also eligible to receive a tax rebate of around $336, resulting in a savings of $104.
When measuring the impact on the broader economy, the government study also found the carbon tax will have a small reduction of around 0.1 of a percentage point on Canada’s GDP growth by 2022.
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“If you care about the economy, then carbon pricing is absolutely the best way to reduce greenhouse gas emissions,” says economist Dale Beugin with the Ecofiscal Commission, an economic think tank.
He says a carbon tax is less expensive than other incentive-based programs, which reward individuals and businesses for reducing their carbon emissions.
“Carbon pricing relies on markets and it’s flexible. It gives people the choice as to when and how they reduce emissions, rather than requiring specific actions in specific times.
“It’s the cheapest way and, from an economist’s perspective, it’s the best way.”
Beugin points to examples of carbon pricing systems already in effect; Sweden is home to the world’s oldest and most expensive carbon tax (the equivalent of around $161 Canadian per tonne). Since it was introduced back in 1991, carbon emissions there have decreased by 25 per cent.
Similarly, the United Kingdom introduced a carbon tax on electricity in 2013, which has almost completely wiped out the country’s reliance on coal power.
“Do people respond to price changes? Unequivocally yes,” says Jennifer Winter, a professor of economics at the University of Calgary. “Then the issue becomes: how large is the change and how large is the carbon price that incentivizes that change?”
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British Columbia implemented North America’s first economy-wide carbon tax in 2008, which currently stands at $40 per tonne. However, data from the provincial environment ministry recently revealed that emissions were only slightly below 2007 levels (a drop of less than one per cent over 10 years).
Advocates of the carbon tax note that B.C. has also seen significant population growth during that period (from 4.3 million in 2007 to 5 million in 2019), which would have pushed emissions higher if not for the carbon tax.
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“B.C. has got some of the strongest economic growth in Canada; that’s not because of the carbon tax, but it does show that the carbon tax hasn’t hindered B.C.’s ability to prosper economically,” Beugin says.
But while economists mostly agree that a carbon tax is the cheapest way of reducing emissions, it appears their message has not gotten through to many Canadians.
An Ipsos poll conducted exclusively for Global News found that climate change is the third-most important issue of the campaign (behind health care and affordability) and around 78 per cent of Canadians agree that Canada needs to do more to address climate change.
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But the same poll found that Canadians are also evenly divided when it comes to support for the federal carbon tax, with around two-thirds believing that the tax requires most Canadians to pay more as a result.
“The word ‘tax’ tends to make people think, understandably, that: ‘Look, I don’t like to pay tax. I don’t want to have to pay more,’” Bernstein says. “But the important thing about this program is all the money gets rebated back to households and businesses.”
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