The exchange of opinions on the economic impact of climate change and the proposals for changes required, if any, and in what order, tend to be lacking in the details that are the area of expertise of economists and engineers who have studied and practiced real proposals and projects. For instance, economists interviewed by CBC reporters say that both Prime Minister Justin Trudeau and Conservative Leader Pierre Poilievre are cherry-picking numbers from the PBO report on the economic impacts of the carbon tax.
Robson Fletcher of CBC News asked Trevor Tombe, economics professor at the University of Calgary and a research fellow at the university's School of Public Policy, if axing the carbon tax would, presumably, also axe the rebates. So, on balance, how would that shake out for Canadians?
According to the Statistics Canada model, 94 per cent of households with incomes below $50,000 receive rebates that exceed their carbon-tax costs in 2023.
Roughly half of households in this income category see a net gain of between $20 and $40 per month. About four per cent see a net gain of $70 per month or more.
At the other end of the spectrum, only about 55 per cent of households with incomes above $250,000 receive more in rebates than they pay in costs, according to the data.
Roughly half of households in this income category see somewhere between a net loss of $20 per month and a net gain of $30 per month. About five per cent see a net loss of $100 per month or more.
These high-income households stand to gain the most if the tax were axed tomorrow.
Lower-income folks who are enjoying more in rebates than carbon-tax costs, meanwhile, stand to lose the most — both in absolute dollars and, especially, as a proportion of their total income. (Fletcher, 2023)
The CBC reporter, Fletcher, notes that on the Conservative Party's "Axe The Tax" website it says the "Parliamentary Budget Officer report proves that the carbon tax will cost most households more than they ever get back." and these seemingly contradictory claims coming out of the same report have been a source of confusion. Trevor Tombe, economics professor, says they're not actually at odds; they're simply referring to two different things.
Peter Zimonjic of CBC News reports that experts say the Parliamentary Budget Officer's report on carbon pricing is important but far from definitive. Trevor Tombe, an economics professor at the University of Calgary notes that the report looks at what the cost to individuals and the economy will be in 2030, when the carbon tax rises from its current rate of $50 to $170 per tonne.
"This is one of these issues where both sides of the debate in this case are speaking to a kernel of truth, but also conveniently neglecting some other important considerations,"
The Liberal government points to the part of the report that features straight fiscal math — how much average households pay minus how much they get back in rebates. By that measure, the PBO says, most households profit.
The Conservatives point to a part of the report based on complicated modelling that predicts the economic impact of carbon pricing across the economy on things like wages and investment income. By that measure, the PBO says, most households are out of pocket.
Both sets of numbers show the carbon tax is progressive — those with lower incomes do better under carbon pricing than those with higher incomes. (Zimonjic, 2022)
Brett Dolter, an assistant professor of economics at the University of Regina, comments on the report of the Parliamentary Budget Officer.
The PBO's "analysis assumes that we could be richer if climate change didn't exist, which of course everyone wishes that was the world we live in. But it does exist and we have to decide how to address it," (Zimonjic, 2022)
Dolter adds that we do not have a direct comparison with another proposed federal emissions reduction policy, and economists say that all the evidence so far leads to the conclusion that carbon pricing is cheaper than emission reduction programs that rely on incentives or regulations.
"Generally when economists look at policy pathways, regulation is more costly than carbon pricing, carbon pricing is generally thought of as the most efficient option, the one that's going to cause the least amount of drag on the economy," (Zimonjic, 2022)
All emission reductions policies have a cost and Tombe said the challenge with a carbon tax is that the cost is up front, which can make it hard to sell. But there is also a cost to doing nothing, he added.
"For the government ignoring the costs, that is unfortunate, and for the Conservatives ignoring the benefits is equally unfortunate. Both exist and they should be compared." (Zimonjic, 2022)
As we seek the best plan for Canada to reduce the emissions that cause climate change, we need the detailed analysis of experts even as political posturing tends to cherry pick the information most compatible with their messages to the public.
References
Fletcher, R. (2023, November 8). If Canada axed its carbon tax — and rebates — this is how different households would gain or lose. CBC. Retrieved December 5, 2023, from https://www.cbc.ca/news/canada/calgary/axe-the-tax-and-carbon-rebate-how-canada-households-affected-1.7046905
Zimonjic, P. (2022, October 23). What the Liberals and Conservatives get right — and wrong — about the carbon tax. CBC. Retrieved December 5, 2023, from https://www.cbc.ca/news/politics/house-of-commons-pbo-report-carbon-tax-1.6625612
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