PCP: Arguing for the Carbon Tax System

Hasan Ahmed - Editor-In-Chief
Posted on: July 4, 2018

With the ever-looming behemoth of global warming upon us millennials, it is up to us to start caring for the environment more than ever before. The Canadian government is now setting rules for provinces to set carbon pricing regulations, and this brings the case of a carbon tax vs. cap-and-trade. In this side of the PCP, I’ll be going through a few details and reasons for carbon taxing our pollution. Right now, Ontario uses a cap-and-trade system, but I’ll make the case as to why other provinces (namely Alberta and B.C.) may be benefiting more from the tax.

First of all, some general benefits of a carbon tax. The whole reason for carbon pricing in general is to incentivize citizens and corporations to emit less pollution. Simply put, global warming is bad, and we should try to make it better (I know, mind blowing isn’t it?). A tax on this could really allow us to monitor exactly how much we’re releasing into the environment as well as the rate at which it’s being released into the environment. It also allows for accountability for the person emitting the pollution, and it comes straight out of their pockets (obviously, in theory. I’m not an economist, and I’m not going into the deep dive of tax evasion). The suggested pricing method is to set the tax to something like $10 per tonne, and then increase it by a rate such as $5 per year until it reaches a benchmark (eg. $50 per tonne). This will not only incentivize people to look for alternative, green methods, but also look for them QUICKER than normal. Solar, wind, hydro, etc. would all benefit in some way due to the greener practices, and due to the higher demand for alternative energies, more investments could be placed on these energy industries, resulting in even more innovation and production and a creation of a positive feedback loop of carbon emission reduction.

The additional revenue of the government provided by the tax could be used to mitigate further pollution. I just mentioned the investment in other industries, but also could offer tax rebates/reductions to homeowners and other users. Since their costs might increase due to the tax, “giving back” could theoretically result in neutral gain. We’re using less, but what we use costs more, but since we’re using less, we’ve earned a rebate which pays for what we’ve used. Yes, I’m sure we’ve all looked at our co-op salary and are bummed to see how much of it goes to taxes, since we’re not making a whole lot in the first place. But again, it’s all going to be worth it since we’re doing for society and for the earth. Starting at a low level of taxes can also allow for all of us to afford it and can give us time to find alternatives such as public transportation and biofuels. Besides, taxes are good if they benefit the whole province, and some of those alternatives I just mentioned are some places (other than rebates/reductions that I mentioned above) that this tax money can go. I’m sure we’d all like to see the TTC improved in some way.

Alberta and B.C. are both using the carbon tax system, Alberta having it at $30 per tonne as of 2018, and B.C. having it at $35 per tonne as of April 1, 2018. Although it might seem a little expensive, compared to Ontario starting at $10 it would be cheap. Besides, the environment doesn’t wait; it’ll keep going. To be impactful we need to reduce emissions. In 2015’s Paris Agreement, Canada promised to cut 30% of emissions by 2030. According to the Ecofiscal commission, we would need to set our price to $200 per tonne, so this price seems low in relativity. But if you really want to be hardcore, check out Sweden. Their current rate is 120 EUR (just under $200 per tonne CAD). Economic analyses have shown that their economy has been unaffected as well. This may be due to other parameters of the country as well, but it is evident that the carbon tax did not cause any major downfalls since its implementation back in 1991. They have set a precedent long before us, and we should follow.

There’s no better time to tackle global warming than now. Canada needs to take the steps in the right direction to do whatever it can to implement social and environmental change in our provinces and territories, and a carbon tax might be the right way to go. Alternative energy sources must be improved, economic analyses must be performed, and incentives should continue to be implemented for carbon pricing to move forward. Quick, everybody start planting trees.

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