A Convenient tax?

Now that the IPCC and Al Gore have been raised to new credential hights with their being honoured with the Nobel Peace prize, it is time to consider the best mechanisms to tackle the Climate Change issue. Taxes are unpopular, but only because they have traditionally been implemented unfairly in the past.

Tax shifting: A Better tax mechanism

Ah, energy costs!… A Godsend to the growing renewable energy market and changing public opinion quicker than the ice caps are melting in the far north. Speaking of north, has anyone noticed what’s happening north of the 49th?.. Well, the answer is lots. As the largest single exporter of crude oil to the US, it is no surprise to most economists up here that the Canadian “loonie” (dollar) has surpassed the mighty “greenback”. But, today, unlike 31 years ago when the CDN$ surpassed the US$ and non-renewable reserves seemed endless despite OPEC’s decision affecting the first wave of energy efficiency. Believe it or not, Canada is among the world’s least-competitive business tax regimes. Exporters are starting to cringe.

It was bound to happen with the consumption and reliance on carbon south of the border and mining in metals encouraging our resource-based economy (contnuously heavily supported by governments who have always supported their growth). Our policies have allowed large corporate resource-based interests to ride into town like the good ‘ol gold rush days.

But, that’s good for jobs and the economy right? Growth, profit — bring it on!

The BIG picture: The well-being of the northern communities are suffering in ways we can only imagine. Forests (the Boreal - lungs of the planet) are being cut at record rates. Dwindling (free) fresh water supplies coming from fast-melting glaciers in the Rockies are used with little regard to the consequences, and we dig, process and send through a pipeline. This increases carbon release from the soil of virgin forests, is extremely energy intensive (there is now talk of putting 2 heavily subsidised nuclear reactors to assist in the expensive production and processing of crude oil from tar (only about 10% of the tar is actually oil)! This does not bode well for our carbon emission targets which would explain why the governing Conservatives are avoiding Kyoto and pushing any real climate change initiatives well into the future (good for the economy, right?). The municipalities there cannot cope with the much-needed public infrastructure. The Indigenous peoples are wondering what happened to their land. Drugs and prostitution are rampant with a ton of short-term employment of (mostly) outsiders that care little about the area they camp at temporarily doing very dangerous jobs with high injury rates… In a word, unsustainable.

Push mechanisms in technology and education/training are needed (by pushing demand) on one side, while also needing to pull (reduce) supply on the other if we are to really reverse climate change in an economically fair and viable way. This will, in turn, create green collar jobs (increasing long-term employment) and decrease our health and insurance costs (less disasters). Oh yeah, no war needed. A viable balance.

The economic solution is tax shifting. It works! Norway is a great example. An oil producing country that took responsibility for their own emissions by taxing their own carbon use. The result is clear. Reports conducted over the period of 1990-1999, observed a significant reduction in emissions per unit of GDP over the period due to reduced energy intensity, changes in the energy mix and reduced process emissions. This was also observed in Sweden, Holland and Finland.

How does it work? Simple: each dollar of carbon tax revenue would trigger a dollar’s worth of reduction in existing taxes such as income, payroll taxes or sales taxes. As carbon-tax revenues are phased in (with the tax rates rising gradually but steadily, to allow a smooth transition), existing taxes will be phased out and, in some cases, eliminated. This “tax-shift” approach would ensure that the carbon tax is revenue-neutral.

Taxing pollution and carbon that are harmful to our health and encouraging violence over ownership and exploitation of these resources, and instead, investing in local mechanisms that both improve our health and local economies (instead of big oil and gas companies, utilities and non-renewable mining and resource companies with strong lobbies). A cap and trade system (without giving away permits as per Lieberman’s bill) would work well alongside this but does not go far enough on its own. Almost as important is taxing land/property instead of homes and buildings. This proves to encourage better management of the land and discourages urban sprawl and big box/large agri-biz. Subsidizing is also damaging and unfair. Our tax dollars pay for buiding logging roads and public lands are handed over to corporations at no cost (like the Alberta tar sands for example) while softwood lumber taxes still apply. Transportation costs with cheap diesel allows improting from China to be a viable option while the manufacturing sector dwindles away. This is not a level playing field and very few benefit — especially the unborn generations.

A shift in tax policy is needed. The answer is tax shifting. Want to learn more? Take the quiz.
www.progress.org/banneker/shift.html