Did you feel the shift? Well, maybe that’s because at this stage it is only a proposed shift. A Green Shift, that is.
Late last week the Liberal party introduced a proposed revenue-neutral shift in burden from personal income and corporate taxes to carbon taxes to be imposed on wholesalers, and passed on to the consumer. The idea seems to be improving environmental consciousness through sticker shock (higher power and heating bills), but without actually reducing purchasing power, particularly for those earning lower wages. In fact, the proposed tax is a flat tax per tonne of carbon, while the reduction in income taxes is progressive, greater relief at the bottom, so the overall affect would be to make Canada’s taxation structure more progressive.
Sounds like a plan with some merit, but our question to you is your threshold for changing habits?
The entire plan is predicated on the idea that you will be so dismayed by the high cost of your heating bill that you will turn it down a couple degrees — since you will be stunned by the hydro bill, you will keep your thermostat two degrees warmer in the summer and start turning off the lights. Is this likely?
Consider the example of gasoline. Gas prices have increased by more than 250 per cent over the past decade, increasing by nearly 30 per cent in the past year alone. Still, we are only now seeing a shift in driving habits, primarily with people purchasing more fuel efficient cars (great time to buy that SUV, it will make a lovely garden piece). Most vehicles going down the road are still carrying only one person. That’s one-and-a-half tonnes of steel designed to move a mere 70 kilograms of flesh.
Given that the current fleet of new passenger cars get an average of 27.5 mpg in the U.S., and assuming the same in Canada (8.7 L/100 km), a driver travelling 10,000 kilometres per year will pay more than $1,150 per year. Given the same fuel efficiency and driving habits, this person would have spent more than $550 per year only five years ago. That’s an increase in fuel costs of $600.
And that’s a VERY conservative estimate, with most drivers covering much more than 10,000 kilometres per year, with most drivers in older vehicles with reduced efficiency, and with many of us driving larger vehicles like SUVs. Still, we are only now changing our habits.
The Liberal party press release suggests the average cost per household of the new carbon taxes will be $225 to $250 per year. Is this going to change our energy consumption habits? The experience with gasoline suggests no.
So how could this “Green Shift” actually shift us toward green? One possibility is a carrot to industry. Make the proposed cuts in business taxes contingent upon environmental performance.
Making tax cuts “so they can invest more in their own practices, reduce their own polluting and increase their energy efficiency” (Liberal party website, A Green Shift For Canada) sounds good, but with a responsibility to shareholders, this tax cut may not translate to greener operations.
– Andrew Laursen is an assistant professor at Ryerson University, studying ecosystem ecology. Sophia Dore is an environmental scientist with Conestoga-Rovers & Associates, an environmental consulting company.