Ontario has dug itself into a deep financial hole. With soaring debt and a sluggish economy, skeptics from all sides are expressing doubt about Kathleen Wynne's ability to manage Ontario's lopsided budget and massive deficit. The responsible thing to do is curb government spending to balance the books.
But some analysts are suggesting that Ontario should raise taxes. McGill University's Dr. Christopher Ragan has even called for a carbon tax.
This is a terrible idea. The last thing cash-strapped Ontario families can bear right now is a tax on everything.
Carbon taxes put a levy on each tonne of greenhouse gases emitted, in an attempt to curb consumption and reduce emissions. It hikes taxes on gasoline, which leads to higher prices on goods that are shipped. It affects the price of food, clothing, household items, equipment and everything else that is shipped across our province via transport trucks.
Carbon taxes are also applied on hydro, so every office, factory, plant, hospital, school, community centre, ice rink and restaurant will feel the hike. The extra costs will surely be passed on to consumers and taxpayers. Electricity ratepayers already struggling to pay their hydro bills -- which have doubled in the past few years thanks to the bone-headed Green Energy Act-would once again face hikes.
It truly is a tax on everything.
Unsurprisingly, carbon taxes are incredibly unpopular. Australia recently repealed its carbon tax less than three years after it was introduced. The tax was devastating to the local economy, and the consensus is that it did nothing to address global warming -- the reason it was introduced in the first place. The new Australian government was elected on one promise: to eliminate the tax. And they did, saving Australian households an estimated $550 per year.
British Columbia pioneered the carbon tax in Canada, introducing it in 2008. And they appear to be suffering from buyer's remorse. To be sure, B.C.'s carbon emissions have fallen in the years since, but perhaps surprisingly, not by as much as the rest of the country. B.C.'s economy has grown slower than the rest of Canada since the carbon tax was introduced, a reversal of the pre-tax trend.
The only reason the carbon tax is quasi-palatable for B.C. taxpayers is because it was sold as "revenue neutral. "The Government of British Columbia pledged to reduce other taxes so that the typical family's tax burden remained the same. They offset the new carbon tax with tax cuts and rebates. But the system isn't perfect, and while the carbon tax is "revenue neutral" to the government, it is not necessarily the case for British Columbia taxpayers. According to the B.C. Grain Producers Association, the average B.C. farmer pays $4,300 a year in carbon taxes.
The Government of Ontario could not afford to make a new carbon tax "revenue neutral." Kathleen Wynne is in desperate need of revenues to make up for a decade-long spending spree and a closet full of billion-dollar waste scandals. Ontario taxpayers would pay the carbon tax alongside the HST, gasoline taxes, and the soaring costs of electricity and green energy.
The last thing Ontario families need is another tax grab. Our economy is too fragile to experiment with risky and unproven taxes.
Besides, Ontario does not have a revenue problem. We have a spending problem.
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