BUSINESS

Carbon Tax: Canada Will Inevitably See One, Conference Told

04/18/2013 12:34 EDT | Updated 04/18/2013 12:34 EDT
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Former Quebec Premier Jean Charest and an unlikely Republican politician-turned-environmentalist are among the people predicting that Canada will eventually see a national tax on carbon.

Though the Conservative government is dead set against the idea, referring to it repeatedly as a “job-killing” measure and a “tax on everything,” participants at a conference in Ottawa Wednesday argued that such a tax is inevitable, and that it would be less painful to implement than one would think.

"I think there is going to be a tax on carbon and I think it will happen in the next 10 to 15 years," Charest told conference attendees.

Several provinces have implemented carbon-pricing policies, including Quebec. Charest said he was able to implement a relatively small tax on carbon in 2007 by charging it at the wholesale level rather than consumer level, and by calling it a “levy” rather than a tax.

He said he was surprised by the industry’s reaction.

“I was expecting a push back, and there was none. And I think frankly the reason was that ... the industry didn't want to attract attention to what we were doing and I don't blame them for that. They said, 'Well just let it go and maybe no one will notice.’ And it worked!"

Charest noted the levy generates $200 million in annual revenue, and has been used to increase funding for public transportation.

University of British Columbia political science professor Kathryn Harrison said B.C.’s experience with a controversial carbon tax worked out along similar lines. She said the public has gotten used to the tax, and support for it has bounced back.

"Over time, the public has kind of forgotten about it. They have gotten used to it, support has rebounded to about 50 per cent, so now any party that wants to get rid of it risks losing over a billion dollars of revenue [over a tax] that no one is worried about. They would have to increase other taxes and ... provoke public ire and so it's actually a pretty stable policy once you get it in place."

They made their remarks at a conference hosted by Canada2020, a progressive organization run by Diana Carney, the wife of Bank of Canada governor Mark Carney.

In a report released ahead of the conference, Ms. Carney argued that Canada could be left at an economic disadvantage if the rest of the world moves forward with carbon pricing plans and Canada does not.

Peer nations and regions such as Australia, California and Ireland have all introduced carbon taxes in the past three years,” she wrote. “This puts Canada at a moral — and potentially long-run economic — disadvantage.”

Speaking at the conference, Green Party Leader Elizabeth May said businesses and politicians were labouring under the delusion that there is no economic cost to polluting, and that a carbon tax would force the cost of pollution to be considered.

"It is because of a market failure that we are allowing this fiction of economic theory [that] pollution [is] free," she said, lamenting what she saw as a lack of political leadership on the issue.

Bob Inglis, a former Republican congressman from South Carolina who has become one of the party’s loudest (and only) supporters of a carbon tax, told the conference he felt carbon pricing would eventually happen in the U.S. as well.

Inglis said the U.S. would eventually have to make a “grand bargain” addressing its deficit, and that bargain will have to include tax-raising measures.

“Do you tax income more heavily, either personal or corporate, or do you shift the tax in part to something that you want less of? We hope that many conservative economists ... will be persuasive in saying change what we tax, tax something that you want less of, which would be emissions."

However, Inglis' own experience with the carbon tax serves as a cautionary tale: He was turfed from office in the 2010 U.S. elections, at least in part due to his views on the environment.

With files from Althia Raj

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