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Why am I supporting the Green Shift?

 

The Liberals are not doing a good job communicating their Green Shift Plan (GS). That’s a pity, because it’s a great idea. Here are some of the criticisms, and my response.

 

It’s too complicated. No more than any other tax. I used to be a tax lawyer – did you ever try to read the tax code? But the basic concept of the Green Shift is simple: we should tax income less, and pollution more. And the great advantage for consumers is this: for most of us, it’s much less painful to reduce pollution (and thus tax) than it is to reduce income. Some, however, need help, and it’s largely because of that help that the Green Shift seems complicated.

Gas prices are already too high. Gas prices won’t be affected by the Green Shift, because the federal government already puts a $40/ tonne excise tax on gasoline. The Green Shift will match that tax on other fuels, but won’t increase it on gasoline.

It will cost us too much. In four years, there would be a 10% reduction in the lowest income tax rate (from 15% to 13.5%). Middle class tax folks would keep a penny more of every dollar earned. That’s a lot of extra money in most people’s pockets, more than enough to offset the small rises in some fuel costs that the Green Shift would create.

What about my company? Corporations would also see their income tax drop 1 percentage point, and could take advantage of a whole array of incentives to become more energy efficient and use renewable energy. With fuel prices high and likely to rise much higher in the next five years, there will be lots of good financial reasons to improve energy efficiency. These include $400 million in emissions reduction credits.

It will wreak havoc on our economy. People often say that about any change in government fiscal policy and it’s almost never true. Businesses need predictability and time to adapt, and the Green Shift would give them both of those. Besides, the changes that the Green Shift will make are tiny compared to the changes businesses regularly cope with in the dollar, fuel prices, consumer preferences, etc. It is failing to act on climate change that will wreak real havoc, not very long from now.

It’s the wrong time. What would be the right time? Canada is already embarrassingly late in acting on climate change. We pride ourselves as a good world citizens, but on this subject we have behaved abominably. Every credible economic analyst, including the National Round Table on the Environment and Economy, tells us that the longer we wait to put a price on carbon, the greater the economic pain will be.

And in terms of timing, if economic circumstances are going to be difficult this winter, that’s when I most want a cut in my income tax.

It will hurt those who are most vulnerable. The Liberals are very conscious of this issue, and have promised to spend large swaths of the carbon tax revenue to help those who most need it. Because energy needs are higher in rural and northern Canada, the GS includes Green Rural Credits of $150 per person; Northern Residents will get an extra $1000 deduction from tax per year.

The most vulnerable industries — agriculture, forestry, trucking and fisheries — will get $900 million in incentives and rebates to reduce their fuel use and invest in cleaner technology, on top of the accelerated capital cost allowance and other credits.

It’s a money grab. The Liberals promise that the Green Shift will be revenue-neutral, i.e., all the money raised will be plowed back into our hands as tax cuts or credits, and not diverted into government spending. The toughest question seems to be: Can we trust him on this? Governments are notorious for promising to keep taxes low, and doing something else. But most of us trust Auditor General Sheila Fraser, and Dion would put her in charge of keeping him honest on this. That’s good enough for me – she is a tiger!

 

Dianne Saxe and Jackie Campbell, Tuesday, September 16, 2008

Resources:

The GS is available at http://thegreenshift.ca/pdfs/green_shift_book_en.pdf

 

For a snapshot of each party’s climate change platform, see the Sierra Club of Canada’s Voter’s Guide to the Climate Crisis Election at http://www.sierraclub.ca/national/vote-canada/2008/voters-guide-climate-crisis-election.pdf (September 2008). See also the Sierra Club’s blog on the issues at http://www.sierraclub.ca/climatecrisis/ ]

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