From Kenneth P. Green, Ross McKitrick, Elmira Aliakbari
With the federal carbon tax set to rise from $65 to $80 per ton on April 1, two new papers – published today by the Fraser Institute – make two opposing arguments: keeping the tax in place (after it’s set); and the abolition of the tax.
According to the first essay Reform of the federal government’s carbon tax plan, the government should reform the tax to mitigate its negative economic impact so that the tax merely replaces, rather than complements, other government rules and regulations aimed at reducing greenhouse gas (GHG) emissions. Additionally, the carbon tax should be “revenue neutral” – meaning the tax should not generate any new net revenue for the government. Currently, taxpayers are only reimbursed for 90 percent of CO2 tax revenue.
According to the second essay The CO2 tax is no longer redeemable, the federal government should eliminate the carbon tax because real-world examples show that governments in both Canada and Europe have failed to implement robust and well-designed carbon taxes. Most are not revenue neutral, are not levied uniformly across industries, and are layered on top of other costly rules and regulations, negating the tax’s theoretical benefits.
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