Political myths fog crucial Alberta election debate over carbon taxes: economist

Between politicians who fog the truth and the ones just in a fog, Chris Ragan wants to fan fresh air into a carbon tax debate that is clouding Alberta's provincial election and drifting into an upcoming federal campaign.

"It's pretty clear this issue is warming up politically," said Ragan, head of Canada's Ecofiscal Commission, a non-partisan group of academics and business leaders focused on economic and environmental solutions.

"We have been sorry to see that there's a bunch of stuff out there that is either misunderstanding or poorly explained. There are a bunch of myths out there."

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The commission has just published a report on carbon tax misconceptions.

The worst, Ragan said, is that a carbon tax doesn't work.

"If you look at B.C., if you look at California, if you look at the U.K, if you look at Quebec, these policies do work. What they don't do is work overnight."

At least five different published studies have found British Columbia's carbon tax, introduced in 2008, has cut overall emissions, reduced per capita gasoline use by seven per cent, improved average vehicle efficiency by four per cent, cut residential natural gas use by seven per cent and diesel use by more than three per cent.

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Meanwhile, the province enjoyed about three per cent annual economic growth between 2012 and 2017.

Other jurisdictions that have successfully used carbon taxes to reduce emissions include Sweden, Finland, Denmark, the Netherlands, several U.S. states, the U.K. and the European Union.

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Three separate studies found B.C.'s tax either didn't affect jobs or added them. A fourth found a small decrease in jobs for less-educated workers. Studies in the U.S. or the U.K. found little or no impact on job numbers.

The commission's report finds that far from hurting families, 70 per cent of Canadian households will receive more in carbon tax rebates than they pay.

Energy economists such as Mark Jaccard at B.C.'s Simon Fraser University argue that regulations get faster, bigger results and are politically easier to enact. The big cuts to Canada's carbon emissions, he said, have come from closing coal-fired power plants and clean fuel rules.

"Some people will tell you you have to have carbon pricing," he said on a recent podcast. "That's not true. You could do it all through regulations."

You could, concedes Ragan. But that would cost the economy more. Besides, he said, bringing in carbon taxes gives governments an opportunity to cut other levies such as income tax.

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Albertans who believe the province could escape a carbon tax by rescinding provincial legislation may also be mistaken.

Martin Olszynski, a University of Calgary law professor, said all Ottawa would have to do is pass an order in council to bring Alberta under the same federal tax that recently came into effect in Saskatchewan, Manitoba, Ontario and New Brunswick. None of those provinces had its own tax.

"It's a matter of getting cabinet together and writing the order," Olszynski said.

Looking to the courts to block Ottawa's tax is an iffy bet, he suggested.

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In court hearings on Saskatchewan's anti-tax constitutional challenge, Olszynski said, judges asked if allowing Ottawa to regulate greenhouse gases as a matter of "national concern" would impede provincial efforts to do the same.

"If you recognize this matter as a matter of national concern, you would strip away the provincial ability to regulate these things," he summarized.

But Olszynski notes that courts have recognized that many issues especially environmental ones are best managed jointly between national and provincial governments.

Other federal arguments in favour of a national carbon tax are backed by decades of case law, Olszynski added.

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Ragan said the debate over carbon taxes is as important to Canada's future as debates over the GST or free trade with the United States.

"It's a big policy issue and it's appropriate that we're talking about it now."

Ragan just wishes the debate wasn't so mythical.

"We live in a democratic society where people play partisan politics. Those political debates don't always stick to the facts."