The economic impact of a carbon tax falls disproportionately on already struggling lower-income people

Gwyn MorganWildfires in Canada and unseasonably high temperatures in Europe are being blamed on climate change, escalating the perceived urgency to “do something” about carbon emissions.

In Canada, it seems no volume of emissions is too small to worry about. B.C. taxpayers will soon be paying some $28 million to connect cruise ships docking in Victoria to electric shore power so diesel generators can be shut down. This must set a world record in terms of the cost per unit of avoided emissions.

We’re also on track to establish a coast-to-coast cost record on emissions reductions through ever-rising carbon taxes on motor fuel plus deliberate debilitation of the oil and gas industry – though it contributes the largest share of any industry’s GDP and export revenue.

Motorists in B.C., Manitoba, Ontario and Quebec are already paying average federal and provincial gasoline taxes of 15.4 cents per litre, plus carbon taxes of 14 cents for a total of 29.4 cents per litre. The federal carbon tax is scheduled to increase to 37 cents per litre by 2030, taking average gasoline taxes to 52.4 cents per litre.

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But that’s not all. On Canada Day, the feds also imposed their “clean fuel standard,” a scheme requiring providers of motor fuels to progressively reduce “carbon intensity.” Environment and Climate Change Canada says this will raise gasoline costs another 17 cents per litre.

Adding these together means motorists in provinces making up 80 percent of Canada’s population will be paying average motor fuel taxes of 69.4 cents per litre by 2030. In the U.S., by contrast, total federal and state gasoline taxes average just 11.7 cents per litre – with absolutely no sign of increasing.

The Parliamentary Budget Officer has concluded these rising motor fuel taxes are “broadly regressive,” meaning the economic impact will fall disproportionately on lower-income people already struggling to pay the rising cost of groceries and other necessities. And the cost of all those necessities will be driven even higher by carbon taxes levied on the fuels used to produce and deliver them.

How ironic that a self-described “progressive” Liberal government kept in power by the deeply socialist NDP – both supposedly dedicated to protecting the poor – is fighting a war on carbon emissions on the backs of those who can least afford it.

Speaking of people who can least afford carbon taxes, a just-published study entitled How will Atlantic Canada fare under the carbon tax? found that the two most populous Maritime provinces will be the hardest hit. Nova Scotia’s reliance on power generated from high-taxed coal will see its power production costs rise an estimated 109 percent, while those in New Brunswick will climb 42 percent.

That’s the direct impact on individual Canadians.

What about damage to the businesses that employ them? Members of the Canadian Federation of Independent Business (CFIB), struggling to recover from the pandemic, now face bankruptcy due to the year-end deadline to pay back Canada Emergency Business Account loans. The CFIB estimates 250,000 Canadian small businesses are at risk of failure. Ironically, escalating federal fuel taxes, imposed by the government they are required to repay, are raising virtually all of their operating costs as many teeter on the brink of bankruptcy.

Then there’s the impact on our exporters. Cross-border trade with the U.S. accounts for the lion’s share of our exports. Business investment per worker is an important predictor of economic prosperity and competitiveness. A just-published study by the Fraser Institute finds that Canadian business investment per worker was $14,687 in 2021 compared with $26,751 in the U.S. Rising carbon taxes are certain to widen that gap, driving more Canadian factories south of the border – and further driving down our living standards.

But will all this economic sacrifice make any difference whatsoever to climate change? Hardly. Calculations using data from the Government of Canada’s Greenhouse Gas Emissions website show that if all our gasoline and diesel-powered cars and trucks were taken off the road for one year, the total emissions avoided would offset China’s emissions by just 58 hours. But where are the calls for a carbon-intensity tax on Chinese imports?

How ironic that a nation with one of the world’s greatest endowments of energy resources deliberately drives the costs of its energy to be among the world’s highest. It brings to mind the ancient Japanese practice of hara-kiri, meaning “disembowelment with honour.” The difference is that ritual suicide by hara-kiri was a personal choice. Canadians have no choice in the Trudeau government’s disembowelment of the country’s economic well-being.

Gwyn Morgan is a retired business leader who has been a director of five global corporations.

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