One of the biggest issues in the October 14 federal election is the Green Shift, the campaign centrepiece of both the Liberal Party and the Green Party (which calls its version the Green Tax Shift).
It is the sharpest break from the Conservative Party's platform and, indeed, represents a significant break from the Liberal Party's own past policies.
The only problem is: not many people know just what the heck it is.
Some of the blame for this must fall on the parties themselves.
On the Liberal Party's Green Shift website, I had to wade through page after page of vague platitudes before finally discovering the Green Shift Handbook (PDF). Even then I had to muddle through ten pages of boilerplate before getting any clear statements of policy.
The Green Party's Gren Tax Shift page is only marginally better, hiding the actual policy in long-winded economic treatises.
The Green Party would impose a $50 per tonne carbon tax and simultaneously reduce income taxes so the change is revenue neutral.
As the party explains, "The overriding goal of a carbon tax is to send a price signal through the entire economy. It is a straight-forward, efficient way to help get the prices right."
This would include carbon tax rebates for people with low incomes or who live in the rurals and payroll tax cuts for business owners. People who make less than $20,000 a year will pay no income tax.
As total carbon production goes down, the tax per tonne would increase.
This carbon tax would add 12 cents per litre to the gasoline price.
It tends to favour families with one income earner more than families with two income earners for the same total income, as two commuters will produce more carbon.
The Green Party's plan would also increase tax incentives for renewable energy production; eliminate subsidies for fossil fuel production and cap overall fossil fuel extraction; fund building retrofits for insulation, heating/cooling and lighting; encourage healthy communities with active transportation (walking, cycling, transit); and phase out coal, oil, gas and nuclear power plants.
The Liberal Party's Green Shift is broadly similar, albeit more modest. The carbon tax would start at $10 per tonne the first year, rising to $40 per tonne after four years.
As their campaign literature explains, "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."
The Liberals would also reduce the federal corporate tax rate to 14 percent by year four, with an additional percent off for small businesses.
Their plan will boost research and development incentives for green innovation and add a fast capital cost depreciation allowance for green technologies.
The main premise behind this shift is the pragmatic, conservative idea that people respond to price signals.
With an income tax, the only legitimate way to reduce how much you pay is to sock more money into an RSP or to reduce your income.
With a shift to carbon taxation, if you want to reduce the tax you pay, all you need to do is emit less carbon.
It's clear from many European examples that you can do this without sacrificing your quality of life. (In fact, I'd argue that most of the likely changes will actually improve most people's quality of life.)
The Green Party points out that other countries to shift their tax policy from income to carbon have seen significant improvements in energy efficiency and real reductions in GHG emissions while maintaining healthy, strong, productive economies.
Sweden launched a carbon tax in 1991 (yes, they really are that far ahead of us), followed in the 1990s by Finland, the Netherlands, and Norway.
The other main proposal for reducing carbon emissions, which the NDP advocates, is to move to a cap-and-trade system, which regulates emissions at the industry level rather than the individual level.
Under cap-and-trade, the total allowable carbon emissions are capped and polluters are allowed to buy and sell emission permits. Companies that emit less carbon can sell their excess permits to companies that emit more.
Over time, the total cap is reduced as more companies move to less carbon-intensive operations.
Like the carbon tax, cap-and-trade is based on price signals, providing an incentive to pollute less. However, the target of the carbon tax is the individual consumer, whereas the target of cap-and-trade is the industrial emitter.
The NDP plan (which, by the way, is at least as hard to figure out as the Liberal and Green plans) focuses mostly on cap-and-trade, promoting "green collar jobs", and increasing funds for transit and building retrofits.
Cap-and-trade is often seen as more politically palatable, because it doesn't require individual voters to change their behaviour and targets the big industrial polluters, who are the most obvious GHG emitters.
As a result, various cap-and-trade programs are already in operation, and the Kyoto Protocol is based around global cap-and-trade mechanisms.
However, cap-and-trade requires a costly, elaborate system of oversight and regulation, including clear, accurate accounting of industrial emissions, and permit allocation that is strict enough to drive actual reductions.
It requires corporate polluters to report their emissions and government regulators to audit those reports for accuracy and compliance.
Past cap-and-trade programs have been successful. The American Acid Rain Program, a cap-and-trade system for sulfur dioxide and nitrogen oxide in the 1990s, managed to reduce total pollution by a projected 50 percent in 2010.
On the other hand, the European Union Emission Trading Scheme, a carbon cap-and-trade system came under sharp criticism for issuing so many permits that overall carbon production remained virtually unchanged. This has resulted in the regulatory body tightening the caps for phase II of the scheme.
The carbon tax, by contrast, is geared more to drive changes in personal behaviour. Instead of forcing big polluters to change their behaviour, a carbon tax creates an incentive for people to make less polluting choices: to buy a more fuel efficient car, or to carpool, or to move into a neighbourhood with good transit.
It requires less bureaucracy and oversight and is therefore less susceptible to "gaming" than an emissions trading market.
It also tends to be regressive, because it applies equally to everyone whose consumer choices emit carbon, though both the Green and Liberal plans include rebates for low-income earners.
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