Author Topic: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan  (Read 2116 times)

Stashasaurus

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So a few of us from Saskatchewan were discussing the rebate cheques that New Brunswick, Ontario, Manitoba, and Saskatchewan family units will be receiving this tax season.  The provinces mentioned about have not come up with a plan that is satisfactory with the Federal government and as such we will be having federally imposed rates and rebate cheques to cover the costs of the new tax. I am all for the carbon tax as a method of pricing emissions and allowing people to make decisions for themselves about consumption. I disagree however that sending residences of these provinces is the best use of the money raised. If we accept that is consumption tax, like PST, LCT and Tobacco tax and use it for the general revenue fund. I would be excitied if this returned us to a balanced budget or maybe something crazy like eliminate provincal income tax. Do you like the cheques or do you have an alternative way you would see the money spent?

obstinate

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #1 on: January 18, 2019, 10:48:49 PM »
I don't live in your neck of the woods, but I'd just point out that making these taxes revenue neutral is often a way to appease conservatives who are worried about higher taxation, and also liberals who are worried about the regressive effects of carbon taxation. The point of a sin tax is to adjust the relative cost of the "sinful" behavior, not to raise revenue. For revenue, taxes ought to be as efficient as possible (i.e. it should be difficult to avoid them, or to put it another way, they should be unlikely to change behavior). This is why income taxes are, up to a point, one of the better types of taxes out there. You can't easily forgo having an income, so as long as you don't tax it too high, the tax is efficient.

scottish

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #2 on: January 19, 2019, 12:01:37 PM »
In my opinion the government will hire a new army of bureaucrats to manage the carbon tax.

So it is being put to a good use!    For definitions of the word good...

I have to wonder though - will this tax be enough to change anything?   I'm skeptical.   If thousands of people are happy to take out massive car loans to drive around town in F-150's it's hard to imagine a few cents per litre will change their behaviour.

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #3 on: January 19, 2019, 06:20:36 PM »
Do you like the cheques or do you have an alternative way you would see the money spent?

For Ontario, using it to fund transit infrastructure (Toronto to the proportion that the tax money is raised there) would appeal to me.  But the cheques are okay, too.  Letting the people (mis)spend it as opposed to the government (mis)spending it.

Prairie Stash

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #4 on: January 21, 2019, 10:17:03 AM »
In my opinion the government will hire a new army of bureaucrats to manage the carbon tax.

So it is being put to a good use!    For definitions of the word good...

I have to wonder though - will this tax be enough to change anything?   I'm skeptical.   If thousands of people are happy to take out massive car loans to drive around town in F-150's it's hard to imagine a few cents per litre will change their behaviour.
You can track it. Divide your cheque by $20 this year, then $30, 40 and 50 in the following years. That will be the household emissions. SYou can be skeptical until the math is in, but you will have the money in your hands and the math to prove it is available to every Canadian who does taxes. 

Historically, there is ample evidence that as gas prices increase there is a general shift from F150 to smaller vehicles. In fact there is a general shift to larger vehicles currently, remember when gas prices were higher a few years back (2008)? sedan sales were doing well, truck sales were declining.

The data can be checked from 2005 to 2015, in 2008 gas prices peaked and truck sales were hurting. when gasoline became cheaper, truck sales rose.

Canadian_Fire_tobe

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #5 on: January 21, 2019, 02:52:57 PM »
I'm from Manitoba and I will echo @obstinate .

I would be furious (maybe too strong a word) if the money went to a general slush fund. There is a slightly better than 0% chance it would be spent wisely if sent to general revenue.

Sending the money to every man woman and child can't be a long term goal for improving GHG emissions so I'm assuming there is a game the government is playing here.

If the money went towards environmentally friendly options I would be happy, even if it means I get less back personally. I'm thinking rebates for insulation, or more efficient heating or A/C, electric car rebates, discounts for mass transit (I'm not sure Bus ticket discounts would work in Manitoba, people who don't take the bus now won't be convinced to for a 10% discount)

scottish

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #6 on: January 21, 2019, 03:36:20 PM »
In my opinion the government will hire a new army of bureaucrats to manage the carbon tax.

So it is being put to a good use!    For definitions of the word good...

I have to wonder though - will this tax be enough to change anything?   I'm skeptical.   If thousands of people are happy to take out massive car loans to drive around town in F-150's it's hard to imagine a few cents per litre will change their behaviour.
You can track it. Divide your cheque by $20 this year, then $30, 40 and 50 in the following years. That will be the household emissions. SYou can be skeptical until the math is in, but you will have the money in your hands and the math to prove it is available to every Canadian who does taxes. 

Historically, there is ample evidence that as gas prices increase there is a general shift from F150 to smaller vehicles. In fact there is a general shift to larger vehicles currently, remember when gas prices were higher a few years back (2008)? sedan sales were doing well, truck sales were declining.

The data can be checked from 2005 to 2015, in 2008 gas prices peaked and truck sales were hurting. when gasoline became cheaper, truck sales rose.

I find it hard to find good data.    Scotia bank has this report:

https://www.scotiabank.com/content/dam/scotiabank/sub-brands/scotiabank-economics/english/documents/global-auto-report/GAR_2018-07-06.pdf

It's not really detailed enough, but it suggests a steadily growing volume of truck sales year over year, i.e. increasing from about 600K units in 2000 to around 1.4M units last year.    Where is the data of which you speak?

Prairie Stash

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #7 on: January 21, 2019, 04:55:22 PM »

I find it hard to find good data.    Scotia bank has this report:

https://www.scotiabank.com/content/dam/scotiabank/sub-brands/scotiabank-economics/english/documents/global-auto-report/GAR_2018-07-06.pdf

It's not really detailed enough, but it suggests a steadily growing volume of truck sales year over year, i.e. increasing from about 600K units in 2000 to around 1.4M units last year.    Where is the data of which you speak?
https://www.statista.com/statistics/199983/us-vehicle-sales-since-1951/
https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015
Total US vehicle sales and gasoline prices. To get breakdowns of vehicle types you need to sift through the data. No one is saying that people don't love trucks (#1 sellers), but when gas prices rise, truck sales go down more then car sales; they suffer bigger swings. The demand for vehicles is obviously hurt by recessions but the sales type is also driven by gas price as seen in the 2000-2007 data. During that period there was a shift towards crossovers from larger SUV's, so not only was the amount changing but the fleet breakdown changed.

The F150 has long been the best selling vehicle, no one disputes that, but what happens to sales with fluctuating gas prices? Do they stay the same, increase or decreasse with rising gasoline prices?

The first link also draws in the basic premise, if gasoline is cheap, people drive more. If gasoline costs more, people who live cheque to cheque can't afford to drive as much. Trying to make it a single argument would be futile, there is more then one factor at play.

https://www.investopedia.com/articles/personal-finance/062515/do-oil-prices-affect-auto-industry.asp
https://www.cbtnews.com/the-correlation-between-fuel-prices-and-auto-sales/
https://www.cnbc.com/2018/05/05/fuel-prices-are-rising-again-just-as-automakers-pull-back-on-sedans.html
You can google more. Some of the links I found look funky, some look credible. The data is such that when gas prices spike, Hummer sales tank.

For the record, I'm not suggesting a 1% increase will result in 1% less being used; its not a 1:1 ratio. I suspect its more like 1:0.1 (or less). That's what makes sin taxes work, you increase price by 10%, lose 1% in sales and end up 9% better off (poor math to illustrate a point). You can also read up on the impact of sin taxes on consumption, in general as the price of cigarettes rise, the amount people smoke decreases.

Stashasaurus

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #8 on: January 21, 2019, 09:18:04 PM »
I'm from Manitoba and I will echo @obstinate .

I would be furious (maybe too strong a word) if the money went to a general slush fund. There is a slightly better than 0% chance it would be spent wisely if sent to general revenue.

Sending the money to every man woman and child can't be a long term goal for improving GHG emissions so I'm assuming there is a game the government is playing here.

If the money went towards environmentally friendly options I would be happy, even if it means I get less back personally. I'm thinking rebates for insulation, or more efficient heating or A/C, electric car rebates, discounts for mass transit (I'm not sure Bus ticket discounts would work in Manitoba, people who don't take the bus now won't be convinced to for a 10% discount)

The long term game is to increase the cost of carbon intensive activities ( driving a car with a V8 engine , living by yourself in a house, flying to Cuba) so that less of these activities take place and as a country we produce less CO2. I assume the idea is that even when we recieve the cheques we will see the increased cost and act accordingly.

As to electric car, or insulation rebates: When we subside certain winners with government funds, ie electric car rebates, how do we know that we are backing the correct solution and not the one with the best lobbyist? Why do we have government mandated ethanol requirements in our gasoline? l have no problem sending the money to the general revenue fund because the money has to come from somewhere, and it might as well come from an activity I can control.

*full disclosure, I am not above taking advantage of the government choosing winners. I maximize my registered accounts and am willing to take SaskPowers money for solar panels*

obstinate

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #9 on: January 21, 2019, 10:26:07 PM »
Sending the money to every man woman and child can't be a long term goal for improving GHG emissions so I'm assuming there is a game the government is playing here.
You aren't echoing me, I don't think. Sending the money back to everyone is exactly the ideal implementation of sin taxes. The idea is to make the bad behavior relatively more expensive without affecting the average person's net income.

So, for a carbon tax, the way it works is everyone pays an extra dollar per liter of fuel. Then, the government sums up everything that was paid, and sends the average amount paid back to each household. After receiving the rebate, a Prius or Leaf owner should actually have more money than they started with, because they burned so little carbon relative to the average. But the average F150 owner will have less money.

The idea is to incent that F150 owner to consider how painful visiting the pump is, and maybe choose a different car next time. Or to encourage the hybrid and electric car owners in their decisions ("Oh, man, this gas station visit would have been much more expensive if I had a bigger car! Sure am glad/will next time buy a similar fuel sipping vehicle."). You can do all this without affecting the average consumer's wallet at all, but at the same time, you've created an incentive for every consumer to reduce their carbon impact.

In theory, this should be sufficient to drive any amount of carbon reduction desired: you just gradually ratchet up that tax until the total carbon emission rates are what you need to accomplish your policy goals. But we won't do that, because humans suck at long term thinking.
« Last Edit: January 21, 2019, 10:28:26 PM by obstinate »

Gail2000

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #10 on: January 22, 2019, 09:01:31 AM »
I feel generally people are far to comfortable in debt. They whine and complain about things being too expensive and buy it anyways. Being already taxed at an insane rate, are canadians numbed to yet another taxe? I'm inclined to say yes. People's (including myself) entitlement is ingrained pretty deep. Talking sense hasn't seemed to work. The government over all spending should be managed better in its targeting. There is a lot of waste. So for a tax to make a difference, the people paying it need to see it go to good use not just the administration.

Sorinth

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #11 on: January 22, 2019, 03:29:34 PM »
Assuming it survives short term (Courts battles, upcoming election) then it's something that future governments will have a hard time undoing. Once people get used to getting these checks it will be hard for a party to campaign on taking away that money. And that is worth something, especially when you look south of the border and see the damage Trump's administration is doing to the fight against climate change.

scottish

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #12 on: January 22, 2019, 04:56:20 PM »

I find it hard to find good data.    Scotia bank has this report:

https://www.scotiabank.com/content/dam/scotiabank/sub-brands/scotiabank-economics/english/documents/global-auto-report/GAR_2018-07-06.pdf

It's not really detailed enough, but it suggests a steadily growing volume of truck sales year over year, i.e. increasing from about 600K units in 2000 to around 1.4M units last year.    Where is the data of which you speak?
https://www.statista.com/statistics/199983/us-vehicle-sales-since-1951/
https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015
Total US vehicle sales and gasoline prices. To get breakdowns of vehicle types you need to sift through the data. No one is saying that people don't love trucks (#1 sellers), but when gas prices rise, truck sales go down more then car sales; they suffer bigger swings. The demand for vehicles is obviously hurt by recessions but the sales type is also driven by gas price as seen in the 2000-2007 data. During that period there was a shift towards crossovers from larger SUV's, so not only was the amount changing but the fleet breakdown changed.

The F150 has long been the best selling vehicle, no one disputes that, but what happens to sales with fluctuating gas prices? Do they stay the same, increase or decreasse with rising gasoline prices?

The first link also draws in the basic premise, if gasoline is cheap, people drive more. If gasoline costs more, people who live cheque to cheque can't afford to drive as much. Trying to make it a single argument would be futile, there is more then one factor at play.

https://www.investopedia.com/articles/personal-finance/062515/do-oil-prices-affect-auto-industry.asp
https://www.cbtnews.com/the-correlation-between-fuel-prices-and-auto-sales/
https://www.cnbc.com/2018/05/05/fuel-prices-are-rising-again-just-as-automakers-pull-back-on-sedans.html
You can google more. Some of the links I found look funky, some look credible. The data is such that when gas prices spike, Hummer sales tank.

For the record, I'm not suggesting a 1% increase will result in 1% less being used; its not a 1:1 ratio. I suspect its more like 1:0.1 (or less). That's what makes sin taxes work, you increase price by 10%, lose 1% in sales and end up 9% better off (poor math to illustrate a point). You can also read up on the impact of sin taxes on consumption, in general as the price of cigarettes rise, the amount people smoke decreases.

In my opinion there are too many exogenous variables to establish a quantifiable relation between truck sales and gasoline prices.   I'm not arguing that there's no relationship - it seems only sensible that higher gasoline prices would cause people to buy more fuel efficient vehicles.

Just to be clear, I'm skeptical that the carbon tax will be high enough to have much effect.    In fact, I like your example with the 1:0.1 (or less) ratio.

Prairie Stash

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Re: Canadian Carbon Tax - New Brunswick, Ontario, Manitoba, Saskatchewan
« Reply #13 on: January 23, 2019, 06:24:28 PM »
Just to be clear, I'm skeptical that the carbon tax will be high enough to have much effect.    In fact, I like your example with the 1:0.1 (or less) ratio.
Even the government agrees it won't have high effect, it's likely to reduce emissions by 5-15%, not a whole lot and definitely not enough to meet Paris Accord targets. In total, the hope is 80-90 million tonnes in reduction and the goal is to get down to 535 from 730 MT.

Closing the remaining coal plants will kick in 16 million tonnes/year to the goal (looking at SK, AB and NS). Methane leaks will get 25 million (AB, SK). The projected cuts from the industy side aren't enough to close the gap. There are other industry programs, they get a lot of boutique programs.

Its funny, everyone knows it doesn't go far enough, no one is disputing its not enough to meet the targets (the Liberal Gov't is quite transparent on this). People say it won't do much as a rationale to cancel the entire thing, but no one is able to quantify what the damage to the economy would be either. Whats more damaging to SK, this carbon tax or the closure of 30% of their electric grid? Ontario has experience in that department already.

 

Wow, a phone plan for fifteen bucks!