The federal Liberals recently stated with much fanfare that they eliminated the consumer carbon tax. While Canadians were expected to be grateful for Liberal largesse, most sensible people wondered why these same Liberals ever inflicted the tax on Canadians in the first place if it was so problematic, and why it had for many years been sold as a boon to most Canadians’ finances. And after years of Liberal denials that the carbon tax increased inflation, the Bank of Canada has just come out with an analysis of how inflation will be dropping now that the tax is gone. Pants on fire, Liberals! As well, it must be said that the consumer carbon tax is not actually eliminated – which would require a sitting Parliament to withdraw the legislation – but just reduced to a zero rate. There are no guarantees this tax will not return if the Liberals win the upcoming election.
The reduction of the consumer carbon tax did serve to draw attention to the existence of the industrial carbon tax, something many Canadians may not have known about. Liberal Leader Mark Carney was very careful with his wording that only the consumer tax would be lowered, with the industrial version likely to be increased to punish businesses even more. The industrial carbon tax is even more insidious, as it is hidden to the consumer yet of course will find its way into consumer prices, just in a sneakier manner than the visible consumer version.
Canada’s industrial carbon pricing system is advertised as the most important policy for reducing emissions. It is also called the large-emitter trading system. Each province or territory is permitted to develop their own carbon pricing system or have the federal “backstop” put in place. As for the “trading system,” industries are supposed to only pay for emissions that exceed a particular limit, and if they do better than that limit, they can earn credits they can sell for cash.
This scheme was promoted by the Liberal government as a winner as it would supposedly cost consumers “next to nothing.” Carney has recently continued to promote this fiction that businesses will bear the brunt of the costs for the industrial carbon tax even as he plans to increase it. The reality is that anything that imposes additional costs on businesses will eventually end up in the price for their product and will indeed cost consumers.
Any carbon trading system is a disaster for small businesses. The complexity involved in tracking emissions, comparing them to industry averages and entering into a trading marketplace is very difficult and costly for smaller firms. Also, within these systems larger firms can typically negotiate favourable terms where small businesses do not have that kind of negotiating power or the volume to obtain special deals.
Carbon trading markets have become known as “the mother of all Enrons” as they are especially vulnerable to cheating. Such systems in Europe have become notorious for companies who game the system with no tangible environmental gains, known as “greenwashing.”
Carney and others have defended the current industrial carbon tax in Canada as it will supposedly permit us to trade more freely with other countries that have such a system, notably the EU. It is argued that industrial carbon pricing helps protect Canadian businesses from carbon tariffs that some regions impose on countries that do not have carbon pricing. However, other than the EU and possibly the UK, no other countries have such systems so the advantages are quite limited and impose a cost on Canadian businesses that is not incurred by most of our trading partners.
As with virtually all of Canada’s carbon pricing policies, with the industrial carbon tax we are once again disadvantaging our businesses with costs and red tape that most of their global competitors do not face. Carney’s boastful reduction of the consumer carbon tax rate to zero will only be offset by an increase to the hidden industrial carbon tax. Although Canadian consumers will be happy to see gas prices fall and a reduction in the rate of inflation in the short term, the as-yet-unknown hike in the industrial carbon tax that Carney has vaguely spoken about could turn out to be even worse.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
