Well there would be an increase in various fuel taxes. However according to page 28 of the Green Shift Handbook there is no increase in gasoline taxes for the forecast period. Apparently, truckers, farmers, manufacturers, all have to make cuts, except private drivers....who are responsible for nearly one sixth of Canada's carbon emissions. That seems like a political choice to me. However, you are right that the merits of carbon taxes still hold.
The carbon tax will still apply to gasoline, and diesel. It is federal excise taxes that are being phased out.
Diesel isn't the saviour, but it certainly can help. It emits more carbon per litre (
http://www.epa.gov/oms/climate/420f05001.htm) but diesel engines are disproportionately efficient to the amount of carbon dioxide they produce. Diesel engines are roughly 20-30% more fuel efficient while pumping out only 10% more CO2. There are strong thermodynamic reasons for this....namely the much higher T and P of combustion inside a diesel engine.
If this is true, then diesels will still be competitive after the phase-in of the carbon tax puts the two fuels on an equal footing wrt tax per unit of CO2e emitted. You're suggesting the government pick winners.
I have a cousin who works at Walmart and is working with them on engineering a more efficient logistics flow. However, the challenge here is not the Walmarts of the world. You and I both know that trucking is largely an independent industry. To achieve the kind of fleet wide efficiencies we are talking about, we would have to change the nature of that business....that would mean significant consolidation away from the owner-operator rig. Or perhaps moving away from long distance trucking altogether in favour of rail. That's okay with me, but politicians should be honest about the end state here. And the idea of increased diesel prices prompting action also does not jive with the fact that many truckers have just as much incentive now with our record oil prices to make those changes but aren't doing so. They can't afford it. Instead of a fuel tax, a rebate for efficiency upgrades to the rigs might actually do more.
A few points:
-the big logistics players represent a large percentage of energy consumed in transportation.
-independents, if they cannot afford high ROI investments in their equipment (we're talking payback of 3-5 years), probably shouldn't be in business. It would be relatively easy to make the business case for a loan to finance any such investment.
-I don't think we should worry too much about long-haul trucking becoming less prevalent. This industry is subsidized to a large extent through the punishing amount of wear and tear on publicly maintained highways when intermodal freight relies much more on privately maintained infrastructure. I'm not sure if rail diesel is subject to the same excise tax, but if so, I don't know how you could call that anything but a subsidy for long-haul trucking. It amounts to government picking winners...
-I don't like the idea of providing rebates for equipment purchases. It smacks of government picking winning technologies, industries, firms, etc. when it is notoriously bad at it. I could more easily support government loans to finance high ROI retrofits if private financing is difficult to obtain, but logically, that shouldn't be the case.
By that same token, if the market is already doing the job, then why the need for carbon taxes? Higher oil prices have done more for incentivizing fuel consumption than Dion's carbon tax could achieve in half a decade. It's the pace of increase here. Basically, Dion is adding about 17 dollars a barrel in about 4 years....over and above any price increases in the market. That's a significant stress on any energy intensive active.
Carbon taxes are great because the allow us to use the proceeds to lower taxes that are incredibly damaging to the economy. Corporate income taxes in an open economy like Canada lowers the return on capital. Since capital will go elsewhere if it cannot achieve the world rate of return, it lowers investment in Canada and thus jobs. Not to mention that wages for workers tends to be decreased as a result of corporate taxes, making them quite regressive. Quite bad for the economy, all around. Personal income taxes lower the incentive to work, leading to less work effort and less incentive to save and invest. These effects are also quite bad for the economy. Overall, a carbon tax would allow us to reduce more economically damaging taxation.
What does Dion plan to do if next year's hurricane season suddenly sends oil prices with his carbon tax to 160 dollars a barrel equivalent...a very real possibility. A carbon tax will simply apply pressure to shift the demand curve leftward. However, given that most companies won't have adjusted to the new taxes yet, during the lag period, they will experience higher energy costs that inevitably will impact their bottom line. For example, Canada already taxes aviation fuels at some of the highest rates in the world. Dion plans to add to that. What is his plan, when this contributes to bankrupting Westjet if oil prices spike dramatically like this year...next summer?
If oil spikes during hurricane season, as it has for years now, there will only be relative minor economic effects, as it is temporary, and caused as much by runs on the gas station due to perceived scarcity than any real shortage.
Canadians will continue to fly. Westjet will not go bankrupt before much less efficient carriers go under. Fares will rise, as they should, and the current oversupply of airliner capacity will diminish as languishing, inefficient players go out of business around the world. Predictable price increases are much less likely to cause financial difficulties than random price fluctuations, which then require hedging to manage the risk. If Westjet were to go bankrupt, it wouldn't be because of a couple cents per litre change in the price of aviation fuel made known months and months in advance.
It seems that you're scaremongering, for some strange reason. What I predict will happen: the fares will rise (or new fees will be levied) to reflect the new level of taxation. Airlines that can increase their energy efficiency will be more profitable. In other words, more or less the same regime as we have now, except passengers pay a bit more, while taking home larger paycheques. The increased price of fuel pushes energy-saving investments a little closer toward the cut-off ROI/payback/IRR needed to justify the capital outlay.
It's not really rocket science, nor is it a huge, abrupt change in the economy. A government of Canada report, commissioned by the Harper government, estimates that the economic effect of a fully-phased in carbon tax would essentially be noise on overall GDP numbers with a slight negative effect at first becoming a slight positive effect over about a five year period.
I agree that 3 billion a year isn't much. But it's question of what they would cut. They aren't saying. Eliminating the accelerated capital cost allowance would only save 6 billion over 4 years. And I agree, that should be canned. But I'd like to see Dion pledge to cut the 4 billion in spending for Quebec and still keep those votes. Heck if he pledged that cut, he'd get my vote instantly! Still leaves a 2 billion hole, though that's fairly small......
The accelerated CCA is not a bad thing for the economy, except that it was relatively sudden and brief, making it hard to plan around.
The $4 billion in infrastructure for Quebec doesn't need to be cut, but it can be their share of the Liberal's proposed new infrastructure spending. $2 billion is indeed small, given estimated revenues for the period in the scope of the costing is over a trillion dollars. I would support the phase-out of the child-sports tax credit, the transit pass tax credit and the textbook tax credit. They seem overly cumbersome to administer vs. other ways of channeling the funding: tax cuts for families, increased infrastructure funding, and new student income supplements bundled with GST rebates.
