Carbon Tax: Who wins, who loses?

This is from the Star.
The results of the tax are difficult to predict and also who exactly will win and lose. I find it strange that Dion should trot this tax out as a center piece of his policy. It is certainly not at all clear that it is the sort of policy that can be easily sold to the public or that it will in any way increase his popularity at this juncture when people are already angry at high costs of fuel. There may be little appetite and much aversion to a policy that is perceived to increase costs even though it is claimed to be revenue neutral. Sometimes I wonder if some are plotting to have Dion fail! Of course many environmentalists will applaud the tax but this may not translate into a more widespread increase in voter support.
The Liberals have already lost any credibility in my view because of their craven support of Conservative policies that they claim to oppose. Harper may just as well have had a majority since the Liberals are unwilling to challenge him except with their mouths.

Carbon tax: Who wins, who loses? TheStar.com - comment - Carbon tax: Who wins, who loses?
June 23, 2008 Carol Goar
Bill Graham always had a talent for cutting through political bafflegab.
It is a shame the Liberal elder statesman – who served as interim party leader, foreign affairs minister, defence minister and five-term MP for Toronto-Centre-Rosedale – is no longer a member of Stéphane Dion's caucus.
With one simple question, he pierced the attractive packaging of the Liberal leader's carbon tax plan. "What does revenue-neutral mean? It sounds nice when you say it, but it will create winners and losers. Who's going to win, who's going to lose and who's going to pay?"
Unfortunately, Graham – who is now chancellor of Trinity College at the University of Toronto – didn't ask that question in Ottawa. He posed it at a panel discussion in Toronto, organized by the Institute for Research on Policy Public.
The influential think-tank invited the city's business leaders, bankers, economists, energy experts and political analysts to a two-hour working lunch last week to discuss the challenges of crafting a carbon tax that doesn't undermine Canada's competitiveness, doesn't exacerbate regional disparities, doesn't cause federal-provincial battles and doesn't trigger a public backlash.
It was an enlightening session. The three panellists – Mark Jaccard of Simon Fraser University, Thomas Courchene of Queen's University and Sam Boutziouvis of the Canadian Council of Chief Executives – laid out the complexities of taxing fossil fuel use in daunting detail.
It would force exporters to jack up their prices, putting them at a disadvantage in world markets. To protect Canada's share of global trade, Ottawa might have to exempt products destined for sale abroad from the tax.
It could induce energy-dependent manufacturers to move to countries with lax environmental policies. The one percentage point cut in corporate tax rates that Dion is offering, plus the incentives for investing in green technologies, may not be enough to stem the outflow.
Imposing a carbon tariff could contravene Canada's trade obligations. It is unclear how a Liberal government could penalize imports from countries with lax environmental policies without violating the World Trade Agreement.
Putting a price on pollution would hurt some regions more than others. The impact would be particularly severe in the industrial heartland, which is already reeling from high energy prices and a sputtering economy; and the western oil sands, which spew huge amounts of greenhouse gas into the atmosphere.
Finally, all the revenue from Dion's carbon tax would flow into federal coffers. Provinces that took the lead – such as British Columbia with its groundbreaking carbon tax and Quebec with its tax on oil and gas distributors – would be expected to join the federal plan, losing their right to distribute the proceeds of the tax according to provincial needs.
"This is going to be messy – really messy," Jaccard warned.
No one in the room needed much convincing. For all Dion's talk about simplicity and fairness, it is clear the "green shift" he is proposing would be one of the most complex, challenging and divisive policy initiatives in Canadian political history.
But it took Graham's plain-spoken intervention to bring the debate back to basics.
He asked the question millions of Canadians will be asking, as they ponder Dion's climate change plan: Will I be a winner or a loser?
The Liberal leader's pledge to return every dollar of his carbon tax doesn't really answer that question.
Collectively, Canadians will be no worse off. But individually, their fates will vary, depending on how much they earn, where they live, how they heat their home, what they do for a living, how many children they have and how much flexibility they have to shrink their carbon footprint.
What Dion is proposing is a massive wealth transfer, designed to clean up the atmosphere, cut poverty and transform the industrial landscape.
If more voters see themselves as winner than losers, Dion's plan will fly. If not, it will fail.
The technicalities of taxing carbon may be opaque. The political calculus is crystal clear.
Carol Goar's column appears Monday, Wednesday and Friday.