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Can a carbon tax change behaviour?
Date: Jun 30, 2008
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It’s a basic and proven formula. A tax generates revenue for government.

However, can it also change behaviour? When it comes to a carbon tax, that’s the million-dollar question.

Liberal Leader Stéphane Dion is among the latest politicians to embrace the notion that a carbon tax will not only cause a seismic societal shift away from carbon-producing fossil fuels, it will also draw electoral support from a public anxious for meaningful action on climate change.

In a manner a carbon tax is similar to sin taxes on cigarettes, as it strives to lessen a dependency. But unlike tobacco, oil is not an addiction. It’s the economic lifeblood of the Western world, and emerging powers like China and India.

Getting an individual off tobacco is child’s play compared to weaning society from its dependence on oil. Already, the premiers of Alberta and Saskatchewan have joined Prime Minister Stephen Harper in slamming Dion’s plan, saying it will not only decimate the economies of the oil-rich provinces, it will harm Canadians in all parts of the country.

Another emerging dilemma to tackle is whether high energy costs will do exactly what carbon taxes aim to do: namely, convince people to look for alternatives, including fuel-efficient vehicles and public transit.

At the end of the day will we end up with a tax that simply raises revenue, and doesn’t do what it was structured to do because individuals have made their own choices? If the goal were simply to change individual behaviour, then the answer would likely be yes. But that’s not all that’s at stake.

A major challenge is to convince industries they have more to gain than to lose by using cleaner energy. At least that’s what Dion seems to be up to.

He’s promising to sharply increase taxes on pollution, but at the same time making the plan revenue neutral by returning the $15.5 billion it would raise annually to Canadians through income tax cuts.

His plan would be phased in over four years; $11 billion in income tax cuts would go to individuals while $4.5 billion would be used to reduce corporate taxes. Dion hopes that Canadians will accept higher energy costs in exchange for lower income taxes.

Politics being politics, there are all sorts of ‘conditions’ to negate the impact on individuals, who also happen to be, surprise, surprise, voters. Fuel for cars, buses and trucks would not be impacted because the existing 10-cent-a-litre federal excise tax would be gradually merged with the new carbon tax.

Will it work? If oil prices drop in the short term, a carbon tax has the capacity to keep the heat on individuals and industries to seek cleaner energy. If they stay high, a carbon tax could still be effective – another arrow in the quiver, so to speak. Lower income taxes, perhaps coupled with some future incentive, could prod Canadians into smart-energy purchases.

In part, it comes down to a leap of faith.

Dion has challenged Harper to debate the merits of a carbon tax. So far the PM has responded with typical political rhetoric. He should rise to the challenge. Naysayers should be compelled to explain why no carbon tax is better than Dion’s tax, even with its inherent costs.

Clearly, people want change. Metroland North Media, publisher of this paper, partnered with the Eco Health Initiative committee to produce Eco Pulse, a clean-air guide distributed to Simcoe County District School Board students in grades 7 and 8.

The guide contained clean-air essays written by the students for the Kids Eco Journalism Contest..

The submissions are packed with valuable insight and advice on environmental issues. Youth is making its voice heard, and it’s crying out for action.

Who is listening? Dion’s plan raises as many questions as it answers. But at the very least it is a plan to consider, and it advances the growing realization that climate change is real and action, not just words, are required.

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