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Is a carbon tax necessarily bad?

In my editorial this month I make the argument that while I support Stephen Harper’s election promise to cut the four cent federal excise tax on diesel fuel in half I think it misleading to characterize it, as some industry leaders have done, as the polar opposite of the Liberal plan to introduce a federal carbon tax.
But what I find more disconcerting than trying to link in an overly simplistic fashion (Conservatives want to cut taxes, Liberals want to increase them) two things that are not really related is the background insinuation that a carbon tax specifically is bad for the economy and persistent beliefs in some industry circles that a green economy in general equals a weaker economy.
As I point out in my column this month, I’m not sure if a carbon tax would be good over the long run for our country or not. The Liberals have some important questions to answer first.
• How high. does the levy have to be to truly change behaviour? The tax grab on cigarettes is damn high, yet I still see plenty of folks happily puffing away on their cancer sticks. If it doesn’t change behaviour, it’s just a tax grab.
• What would they do to encourage the US government (it seems both McCain and Obama are willing to do something on greenhouse gas reduction) to adopt similar legislation so our economy is not placed at a competitive disadvantage?
• And how would they ensure such a tax would funnel money into technology aimed at clean energy solutions rather than becoming another bureaucratic boondoggle?
But just because there are important questions the Liberals must answer, doesn’t mean that a carbon tax should be quickly dismissed as bad for transportation and Canada. Nobody likes to pay tax but if we truly care about paying more than just lip service to a sustainable economy, we have to consider the other side the equation.
As with any new technology, green products are expensive to introduce. Can a green economy go mainstream in Canada unless the government puts a price on carbon emissions?
Take for example Toronto-based company EnviroTower, which has patented a process to dramatically cut the amount of electricity and water needed to run the air conditioning systems of office towers. The company was looking for $10 million from investors. It wasn’t a big sum, especially when you consider it had already lured some big corporations such as Heinz. Yet, as owner John Coburn, complained to the media: “The really sad thing is that we have to go outside the country to raise money. That’s an indication that in Canada the commodity-side people made good returns in oil and gas, but they don’t take the risk with newer technologies. Hopefully, that changes over time.”
Perhaps legislation that truly makes it costly to emit carbon into the atmosphere would shake us out of our lethargy and shorten the timeline towards a more sustainable economy.
That’s the debate we need to be having about carbon tax proposals rather than dismissing them because they will cost money.
In my next blog I would like to address the still persistent – and damnably defeatist, frankly – belief that a green economy equals a weaker economy.

Lou Smyrlis

Lou Smyrlis

With more than 25 years of experience reporting on transportation issues, Lou is one of the more recognizable personalities in the industry. An award-winning writer well known for his insightful writing and meticulous market analysis, he is a leading authority on industry trends and statistics.
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