Author Topic: Canada's carbon Tax strategy  (Read 2197 times)

Prairie Stash

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Canada's carbon Tax strategy
« on: October 23, 2018, 03:55:24 PM »
So it turns out I'll be getting a cheque starting in 2019 to rebate my carbon tax. It will be a net gain for me, I have a low carbon lifestyle; we drive way under average, have small heating bills and small electric bills.

https://www.cbc.ca/news/politics/tasker-carbon-tax-plan-trudeau-1.4874258
"According to background documents supplied by the government, the $20-per-tonne carbon tax will result in an approximate cost increase of 4.42 cents a litre for gasoline, 3.91 cents per cubic metre for natural gas and 3.10 cents a litre for propane."

So rather then seeing this as a new tax, I'm seeing dollar signs. I can pretty much gurantee I'll come out ahead by several hundred/year. The link has a graphic showing the amounts people are expected to pay in and the amount they'll receive.

Anyone else get a payday from this?



scottish

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Re: Canada's carbon Tax strategy
« Reply #1 on: October 23, 2018, 06:44:24 PM »
We buy about 3000 L of gasoline per year.    An extra $0.04/L is about $120/year.

We can use a lot of natural gas to heat the house in the winter.   Last January we used about 600 cubic metres, so maybe we total 3500 cubic metres/year.   With a 0.039/cubic metre tax, that's another $140/year.

Electrical generation in Ontario seems to be pretty much CO2 free at least.

With a rebate of $300, it's pretty close to neutral.

But I think there's something wrong here:

Quote
Even after accounting for the fuel cost hike, most families will come out marginally ahead, officials said.

If most families are coming out marginally ahead, who's coming out behind?    And by how much?    Is this a Pareto law thing where 20% of the families do 80% of CO2 production and they will all get whacked?      And who's paying the government's 25% administration costs on the whole thing?



sixwings

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Re: Canada's carbon Tax strategy
« Reply #2 on: October 23, 2018, 08:11:57 PM »
We buy about 3000 L of gasoline per year.    An extra $0.04/L is about $120/year.

We can use a lot of natural gas to heat the house in the winter.   Last January we used about 600 cubic metres, so maybe we total 3500 cubic metres/year.   With a 0.039/cubic metre tax, that's another $140/year.

Electrical generation in Ontario seems to be pretty much CO2 free at least.

With a rebate of $300, it's pretty close to neutral.

But I think there's something wrong here:

Quote
Even after accounting for the fuel cost hike, most families will come out marginally ahead, officials said.

If most families are coming out marginally ahead, who's coming out behind?    And by how much?    Is this a Pareto law thing where 20% of the families do 80% of CO2 production and they will all get whacked?      And who's paying the government's 25% administration costs on the whole thing?

probably businesses that use a lot of gas like truckers etc.

maizefolk

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Re: Canada's carbon Tax strategy
« Reply #3 on: October 23, 2018, 09:23:07 PM »
But I think there's something wrong here:

Quote
Even after accounting for the fuel cost hike, most families will come out marginally ahead, officials said.

If most families are coming out marginally ahead, who's coming out behind?    And by how much?    Is this a Pareto law thing where 20% of the families do 80% of CO2 production and they will all get whacked?      And who's paying the government's 25% administration costs on the whole thing?

I suspect it's a median/mean thing, which is sort of like a weaker version of your Pareto law example. You cannot produce less than zero carbon dioxide, so pretty much by definition I'd expect the household carbon dioxide usage to exhibit a right skewed distribution. That would mean that more than half of households would be below average in terms of carbon dioxide production (just like most households have below average income).

For one example of a way carbon production could be really skewed: flying is one of the most CO2 producing activities many people might engage in. In the USA more than half of people won't fly at all in a given year, while 6% of us fly 9 or more times per year. 78% of americans fly less than the average of 2.1 flights per year. So if there was a carbon tax and rebate on airline fuel in the usa, almost 4/5th of americans would come out ahead, even though overall the amount of money being paid in would equal the amount of money being paid out.

The other argument would be if the carbon tax is being applied to a lot of products or goods which are being exported from Canada, then some of tax revenue would come from price increases paid by non-canadians, allowing the program to be a net positive to Canadian households as a whole.

But from the way that quote you found is worded, my guess is it's mostly the first explanation rather than the second.
« Last Edit: October 23, 2018, 09:25:41 PM by maizeman »

Prairie Stash

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Re: Canada's carbon Tax strategy
« Reply #4 on: October 24, 2018, 08:58:21 AM »
But I think there's something wrong here:

Quote
Even after accounting for the fuel cost hike, most families will come out marginally ahead, officials said.

If most families are coming out marginally ahead, who's coming out behind?    And by how much?    Is this a Pareto law thing where 20% of the families do 80% of CO2 production and they will all get whacked?      And who's paying the government's 25% administration costs on the whole thing?

I suspect it's a median/mean thing, which is sort of like a weaker version of your Pareto law example. You cannot produce less than zero carbon dioxide, so pretty much by definition I'd expect the household carbon dioxide usage to exhibit a right skewed distribution. That would mean that more than half of households would be below average in terms of carbon dioxide production (just like most households have below average income).

For one example of a way carbon production could be really skewed: flying is one of the most CO2 producing activities many people might engage in. In the USA more than half of people won't fly at all in a given year, while 6% of us fly 9 or more times per year. 78% of americans fly less than the average of 2.1 flights per year. So if there was a carbon tax and rebate on airline fuel in the usa, almost 4/5th of americans would come out ahead, even though overall the amount of money being paid in would equal the amount of money being paid out.

The other argument would be if the carbon tax is being applied to a lot of products or goods which are being exported from Canada, then some of tax revenue would come from price increases paid by non-canadians, allowing the program to be a net positive to Canadian households as a whole.

But from the way that quote you found is worded, my guess is it's mostly the first explanation rather than the second.
70% of households are expected to come out ahead or neutral, 30% pay in.- your first argument

Industrial emissions (product exports) aren't covered in this program. - you are correct, your second argument doesn't apply

lollipop_hurricane

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Re: Canada's carbon Tax strategy
« Reply #5 on: October 24, 2018, 09:05:56 AM »

... if the carbon tax is being applied to a lot of products or goods which are being exported from Canada, then some of tax revenue would come from price increases paid by non-canadians, allowing the program to be a net positive to Canadian households as a whole.

You know, I had not thought of this at all.  I feel quite silly that I hadn't.  It makes so much sense now, Canada passes it's cost over to non-canadians.  I don't really know how much oil we export to the US and elsewhere, but I imagine that this is significant. 

GuitarStv

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Re: Canada's carbon Tax strategy
« Reply #6 on: October 24, 2018, 09:16:15 AM »
So it turns out I'll be getting a cheque starting in 2019 to rebate my carbon tax. It will be a net gain for me, I have a low carbon lifestyle; we drive way under average, have small heating bills and small electric bills.

https://www.cbc.ca/news/politics/tasker-carbon-tax-plan-trudeau-1.4874258
"According to background documents supplied by the government, the $20-per-tonne carbon tax will result in an approximate cost increase of 4.42 cents a litre for gasoline, 3.91 cents per cubic metre for natural gas and 3.10 cents a litre for propane."

So rather then seeing this as a new tax, I'm seeing dollar signs. I can pretty much gurantee I'll come out ahead by several hundred/year. The link has a graphic showing the amounts people are expected to pay in and the amount they'll receive.

Anyone else get a payday from this?

We'll be getting a payday from this.

We don't drive a lot (and I bike to work about 50% of the time) and the smallest part of our heating bill is typically the usage . . . so the rebate should be much higher than the additional fuel costs.


Doing some quick vehicle fuel calculations:

If you work 30 km from home (the average Canadian lives only 22.8 km from work - https://www150.statcan.gc.ca/n1/daily-quotidien/171129/dq171129c-eng.htm), and drive every day you are doing 300 km a week.  Let's add an extra 100km per week to account for non-work related driving.  50 work weeks in a year, so 20,000 km driven a year.

10 km/L is considered average fuel efficiency (https://www.trademe.co.nz/motors/new-cars/buyers-guide/which-car), so you're buying about 2000 L of gas.  That means that it should cost most people 88.4 dollars a year at the pumps, and they're going to get back about 150$.


My main problem with this tax is that I don't think it goes far enough to incentivize environmental practice, but it's a nice start.

Prairie Stash

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Re: Canada's carbon Tax strategy
« Reply #7 on: October 24, 2018, 09:45:54 AM »

We'll be getting a payday from this.

We don't drive a lot (and I bike to work about 50% of the time) and the smallest part of our heating bill is typically the usage . . . so the rebate should be much higher than the additional fuel costs.


Doing some quick vehicle fuel calculations:

If you work 30 km from home (the average Canadian lives only 22.8 km from work - https://www150.statcan.gc.ca/n1/daily-quotidien/171129/dq171129c-eng.htm), and drive every day you are doing 300 km a week.  Let's add an extra 100km per week to account for non-work related driving.  50 work weeks in a year, so 20,000 km driven a year.

10 km/L is considered average fuel efficiency (https://www.trademe.co.nz/motors/new-cars/buyers-guide/which-car), so you're buying about 2000 L of gas.  That means that it should cost most people 88.4 dollars a year at the pumps, and they're going to get back about 150$.


My main problem with this tax is that I don't think it goes far enough to incentivize environmental practice, but it's a nice start.
For Interest, in Ontario electricity is 77g/Kwh, you can calculate the electric part out as well. In contrast Saskatchewan is roughly 650 g/kwh, that's why they emit so much more per household. SK still relies on coal power, MB relies on hydro and has a similiar climate.

"However, grid-delivered electricity in Ontario currently has a much lower annual average carbon intensity of 77 g/kWh. This low carbon intensity is due to the elimination of coal power and the use of nuclear and hydro power to generate most of Ontario’s electricity."  http://arborus.ca/2016/05/carbon-intensity-and-the-ontario-electrical-grid/

PoutineLover

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Re: Canada's carbon Tax strategy
« Reply #8 on: October 24, 2018, 09:53:05 AM »
Quebecers won't be getting rebates. Bummer. But apparently we've had a carbon tax for a while, and it includes 19cents/litre on gas. And we're also the lowest carbon emitters in the country. So it works?
https://www.conferenceboard.ca/hcp/provincial/environment/ghg-emissions.aspx?AspxAutoDetectCookieSupport=1

Lews Therin

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Re: Canada's carbon Tax strategy
« Reply #9 on: October 24, 2018, 09:57:35 AM »
Quebecers won't be getting rebates. Bummer. But apparently we've had a carbon tax for a while, and it includes 19cents/litre on gas. And we're also the lowest carbon emitters in the country. So it works?
https://www.conferenceboard.ca/hcp/provincial/environment/ghg-emissions.aspx?AspxAutoDetectCookieSupport=1

I'm sure Hydro has nothing to do with the low emitting :D

PoutineLover

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Re: Canada's carbon Tax strategy
« Reply #10 on: October 24, 2018, 11:50:20 AM »
Quebecers won't be getting rebates. Bummer. But apparently we've had a carbon tax for a while, and it includes 19cents/litre on gas. And we're also the lowest carbon emitters in the country. So it works?
https://www.conferenceboard.ca/hcp/provincial/environment/ghg-emissions.aspx?AspxAutoDetectCookieSupport=1

I'm sure Hydro has nothing to do with the low emitting :D
Oh I'm sure it does. And I actually remember reading that when electricity is cheaper, people tend to use more of it, so we'd probably be even worse than the average if we had to rely on carbon intensive sources. I'd like to see a comparison based on how much electricity we use.
But on gas prices, I don't drive, but I don't think our price difference from Ontario is all that high. So I wonder how the pricing of the actual product works when you consider that ours seems to be taxed so much more.

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Re: Canada's carbon Tax strategy
« Reply #11 on: October 24, 2018, 01:05:28 PM »
Well in BC the rebate is income based, so we won't be getting anything back.

GuitarStv

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Re: Canada's carbon Tax strategy
« Reply #12 on: October 24, 2018, 01:53:24 PM »
Well in BC the rebate is income based, so we won't be getting anything back.

That's because your premier isn't an idiot who failed to implement the carbon tax out of spite and a lack of belief in global warming.  Your province is collecting the revenues and distributing them in a more sensible manner.

RetiredAt63

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Re: Canada's carbon Tax strategy
« Reply #13 on: October 24, 2018, 02:55:59 PM »
Quebecers won't be getting rebates. Bummer. But apparently we've had a carbon tax for a while, and it includes 19cents/litre on gas. And we're also the lowest carbon emitters in the country. So it works?
https://www.conferenceboard.ca/hcp/provincial/environment/ghg-emissions.aspx?AspxAutoDetectCookieSupport=1

I'm sure Hydro has nothing to do with the low emitting :D
Oh I'm sure it does. And I actually remember reading that when electricity is cheaper, people tend to use more of it, so we'd probably be even worse than the average if we had to rely on carbon intensive sources. I'd like to see a comparison based on how much electricity we use.
But on gas prices, I don't drive, but I don't think our price difference from Ontario is all that high. So I wonder how the pricing of the actual product works when you consider that ours seems to be taxed so much more.

Your gas is about 10-12 cents/liter higher than ours ( at least Ontario near the Quebec border),  based on a drive from the Hawkesbury area (where I crossed into Quebec) to Rawdon last Saturday.

Hydro Quebec prices make home heating with electricity feasible, but Ontario Hydro prices are high enough that home heating with Hydro would generally lead to bankruptcy.  When we moved from Quebec to Ontario, over 10 years ago, the saving on the lower income tax was totally offset by the higher hydro prices, and our use had not gone up.

scottish

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Re: Canada's carbon Tax strategy
« Reply #14 on: October 24, 2018, 05:20:31 PM »
Well in BC the rebate is income based, so we won't be getting anything back.

That's because your premier isn't an idiot who failed to implement the carbon tax out of spite and a lack of belief in global warming.  Your province is collecting the revenues and distributing them in a more sensible manner.

This guy has a much better policy idea:

Quote
OTTAWA — Conservative Leader Andrew Scheer has dropped some breadcrumbs for what his eventual climate plan will look like, saying he believes Canada can reduce global emissions rather than domestic — and without a carbon tax.

"Don't tell Canadians that you've got an environmental plan and that's it's really just in fact a new taxation tool," Scheer said.

The Conservative leader also dismissed the work of Yale professor William Nordhaus, whose research shows a carbon tax to be an effective means of lowering emissions.

"There's no correlation between reductions of emissions and what the Liberals are proposing," Scheer said.

Nordhaus was awarded the Nobel Prize for economics this month for his work on carbon pricing.

Apparently we're going to make not only the Mexicans, but everyone else use less carbon and pay us for it.

Quote
"Are we better off if we displace jobs and investments to other countries and global emissions go up? I say no," Scheer said. "Let's bring that production here and have less emissions globally because we can make things more efficiently and cleaner."

RetiredAt63

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Re: Canada's carbon Tax strategy
« Reply #15 on: October 25, 2018, 08:37:08 AM »

Apparently we're going to make not only the Mexicans, but everyone else use less carbon and pay us for it.

Quote
"Are we better off if we displace jobs and investments to other countries and global emissions go up? I say no," Scheer said. "Let's bring that production here and have less emissions globally because we can make things more efficiently and cleaner."

Like the tar oil sands are so carbon efficient, and a bunch of other manufacturers I can think of.  Industry cleans up when it is forced to; the pulp and paper industry is a lot cleaner than it was, but they had to be pushed.

rocketpj

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Re: Canada's carbon Tax strategy
« Reply #16 on: October 25, 2018, 09:07:30 AM »
Sheer can't say anything that will upset the largest carbon emitters on the planet, which is the oil sands.  There will never be a Canadian Conservative politician who will criticize the tar sands, ever. 

We've had a carbon tax in BC for over a decade, and have apparently seen a reduction in emissions.  Also, our economy is booming (about twice as much as the rest of Canada).

I might get a rebate this year as my actual taxable income is quite low (my capital income is huge but unrealized in this year - I've spent most of the year doing work on a commercial building that has doubled its value while living off DW's wages).  It will feel a bit like cheating if I get a rebate (ditto a GST cheque) as our family income and situation doesn't really justify it.  I'll probably donate both to the local community services society or something.

Prairie Stash

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Re: Canada's carbon Tax strategy
« Reply #17 on: October 25, 2018, 10:04:27 AM »
I went home and looked up the energy bills. Natural gas, electricity and gasoline put our house around 12 tonnes/year; its pretty good compared to the 20 tonne estimate they have for the west (I'm 60% of the average). Our electricity produces a lot of emissions, I'd be lower then QC average if I had their Hydro, I'm in the bottom half of the country with the highest intensity electricity.

At the initial $20/tonne, thats $160 I can expect, going to $400 in year 4. Thats the difference my behaviour makes to my pocket book. A large part of it is Mustachian behaviour too, I drive less, have a smaller house and invest in energy efficient projects.

It feels like I'm getting an environmental award for being a mustachian. I think once the cheques come in I'll make myself a trophy.