Canadian Economists explain Carbon Tax.

Laura Osman of the Canadian Press, in an article in the Globe and Mail notes that every province and territory in Canada has been subject to a carbon price since 2019, with a choice between enacting their own version that meets federal standards or using a federal program. Most use the federal version for consumers and small businesses, while most have their own system for big industry. Conservative Leader Pierre Poilievre has promised to make the carbon price the central issue in the next election.

Canada is number ten for historic GHG

Economist Chris Ragan, director of the Max Bell School of Public Policy at McGill University, who helped draft an open letter defending the policy comments that: 

“The issue has clearly been heating up,... The quality of the debate, I think, is not quite as good as it should be.” (Osman, n.d.)

Ragan said he hopes the economists’ letter better informs that debate, and gives ammunition to politicians who are defending the policy. Ultimately he wants to see the carbon price become politically mainstream.

While the main political criticism of the program is the cost to consumers, the economists say a carbon price is actually the least costly way to lower emissions.

“Other methods, such as direct regulations, tend to be more intrusive and inflexible, and cost more,” the letter states. (Osman, n.d.)

Canadian economists have released an open letter to add professional knowledge to the important discussion of the role of carbon tax in reducing GHG emissions in our efforts to mitigate the effects of climate change. Five claims by carbon tax critics are addressed by presenting evidence.

Claim #1: Carbon pricing won’t reduce GHG emissions.

Evidence shows it reduces GHG emissions at a lower cost than other approaches. The Canadian Climate Institute shows that federal and provincial carbon pricing, for industries and consumers, is expected to account for almost half of Canada’s emissions reductions by 2030. Carbon pricing is the lowest cost approach because it gives each person and business the flexibility to choose the best way to reduce their carbon footprint. Other methods, such as direct regulations, tend to be more intrusive and inflexible, and cost more. (An Open Letter From Economists on Canadian Carbon Pricing, n.d.)

Claim #2:  Carbon pricing drives up the cost of living and is a major cause of inflation.

Evidence shows that Canadian carbon pricing has a negligible impact on overall inflation. According to the Bank of Canada, carbon pricing has caused less than 1/20th of Canada’s inflation in the past two years. Most families receive more money in rebates than they pay in carbon pricing, particularly those with low or medium incomes. (An Open Letter From Economists on Canadian Carbon Pricing, n.d.)

Claim #3:  It makes little sense to have both a carbon price and rebates.

Evidence shows that the price-and-rebate approach provides an incentive to reduce carbon emissions (due to the price), while maintaining most households’ overall purchasing power (due to the rebate). Carbon pricing works by raising the price of carbon-intensive products, so consumers and businesses are incentivized to adopt lower-carbon options, such as smart thermostats, heat pumps, or hybrid/electric vehicles. Those that reduce emissions the most will come out further ahead; they will pay less in carbon fees but still get the full rebate. (An Open Letter From Economists on Canadian Carbon Pricing, n.d.)

Claim #4: Carbon pricing harms Canadian business competitiveness.

The output-based system is designed to maintain industries’ competitiveness: ensuring that the carbon price does not hamper their ability to stay profitable and generate jobs in Canada while competing internationally. In addition, carbon pricing stimulates innovation by encouraging the development and adoption of low-carbon technologies. These incentives help Canadian businesses—in all sectors—stay competitive in the global transition to a low-carbon economy. (An Open Letter From Economists on Canadian Carbon Pricing, n.d.)

Claim #5:  Carbon pricing isn’t necessary.

Canada has many economic challenges to address. In a world of scarce resources, it seems imprudent to abandon carbon pricing, only to replace it with more costly methods of reducing emissions—or, worse still, take no measures to reduce emissions. In short, carbon pricing is the least-cost way to reduce emissions, drive green innovation, and support Canada’s transition to a clean and prosperous economic future. (An Open Letter From Economists on Canadian Carbon Pricing, n.d.)

Skilled tradespeople are employed to do serious construction and maintenance. Health Professionals are charged with our well being. Economists have the expert skill to assess the effect of climate change policy on our financial situation and future well being of Canada in a low carbon economy.

References

An Open Letter from Economists on Canadian Carbon Pricing. (n.d.). Retrieved March 27, 2024, from https://sites.google.com/view/open-letter-carbon-pricing 

Osman, L. (n.d.). Economists defend Liberals’ carbon price as political rhetoric heats up. Wikipedia. Retrieved March 27, 2024, from https://www.theglobeandmail.com/business/article-economists-defend-liberals-carbon-price-as-political-rhetoric-heats-up/ 

Israel or the US Plan for Hamas

Opinion on the plan for Hamas in Gaza is readily available. Policy on this question needs to be informed by experts in the history and geopolitics of the region.

Plan for Hamas

David Aliberti, military fellow with the International Security Program at the Center for Strategic and International Studies (CSIS) in Washington DC, and Daniel Byman, senior fellow with the Transnational Threats Project at CSIS and a professor at Georgetown University, ask “What does destroying Hamas mean?” 

As of December 5, Israeli officials estimated that more than 5,000 Hamas militants of a total military wing of around 30,000 have been killed.

While significant in terms of numbers lost, Hamas is far from defeated, let alone destroyed. French president Emmanuel Macron has asked if anyone believes it is possible to completely destroy Hamas, and that should Israel maintain this goal, the war will take 10 years. Moreover, according to Palestinian health officials, in the same period Israeli Defense Forces (IDF) has killed three times as many Palestinians, including as many children, as it has killed Hamas militants. This ratio is not promising for the success of the IDF’s primary objective.

What is nearly certain is the number of Palestinian casualties will continue to exceed the attrition of Hamas fighters by a large margin. This has already resulted in world opinion shifting against Israel, and in favor of Palestinians, despite Israel having been the victim of an unprecedented terrorist attack. It has also created tension with the Biden administration, Israel’s strongest—and most important—supporter. (Aliberti & Byman, 2023)

After the murder of 1,200 people, the Israeli government is up in arms, with the Israeli people demanding the Hamas threat be ended once and for all. But what might this mean in practice?

Israel has three broad options when it comes to destroying Hamas. The first is to try to kill or capture Hamas’s leadership and eliminate the broader support networks on which it draws. The second is to shatter Hamas’s hold on power by strengthening its rivals, allowing them to displace the group. The last approach is to try to counter Hamas’s ideology that promotes violent “resistance” to Israel. All are difficult to achieve, and each one has its own individual challenges. (Aliberti & Byman, 2023)

1. Eliminate Hamas Leadership

2. Make Alternative Groups Strong

3. Counter Hamas Ideology

The Middle East Policy Council mission is to provide policymakers and the public with credible, comprehensive information and analysis on political, economic, and cultural issues pertaining to U.S.-Middle East. Their goal is to foster more effective policy solutions to current and future challenges. Breaking Analysis on January 12th, 2024, asks “Is Israel Able to Eliminate Hamas?”

Experts assert that the full elimination of Hamas is a lofty goal; Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute in Washington, recently argued that Hamas is “a brand, and as long as there are a group of living Palestinians who want to call themselves Hamas, Hamas still exists.” (Is Israel Able to Eliminate Hamas?, 2024)

Ibish in an interview with Matt Galloway on CBC The Current defined Hamas in this way.

this is a religiously millenarian group, that it is apocalyptic and that it believes that it's doing the will of God. And so all of this is divinely mandated and there's a kind of religious imperative here. So I think there is also an irrational belief on the part of Hamas that in the end, if they are sufficiently fervent that there will be some kind of divine aid as well. (Monday October 16, 2023 Full Transcript, 2023)

Sherifa Zuhur, the director of the Institute of Middle Eastern, Islamic and Strategic Studies, argues, Israel has squandered opportunity in order to “teach Hamas a lesson.” 

She recounts suggestions made to the US and Israel prior to the 2008 war on their willingness to negotiate with Hamas, strengthening of moderates, administration of Jerusalem, and shifting strategy on the occupation of Gaza and the West Bank, with the prescient argument that “locking up the Palestinians in their enclaves will only lead to future outbursts of popular resistance.” 

Israel’s efforts to combat the group, including in 2008-9 and beyond, have utilized “overwhelming military force...to destroy infrastructure and inflict collective punishment” on the Palestinian population. This same accusation has been levied against Israel in the ongoing war.

 Read “Gaza, Israel, Hamas and the Lost Calm of Operation Cast Lead” by Sherifa Zuhur in the special Gaza War issue of Middle East Policy. (Is Israel Able to Eliminate Hamas?, 2024)

 

The history of the relationship and conflict between Israel and Hamas in the 21st century has lacked strengthening of moderates, discussion of administration of Jerusalem, and shifting of strategy on the occupation of Gaza and the West Bank. The United States support of Israel may help avoid a scenario with Hamas like the US experienced in the 10 years to finally track down and eliminate bin Laden. Then his second in command and successor Ayman al-Zawahiri, led al Qaeda for 11 more years, evading allied counterterrorism operations until July 31, 2022.

References

Aliberti, D., & Byman, D. (2023, December 15). What Does Destroying Hamas Mean? CSIS. Retrieved March 26, 2024, from https://www.csis.org/analysis/what-does-destroying-hamas-mean 

Is Israel Able to Eliminate Hamas? (2024, January 12). Middle East Policy Council. Retrieved March 26, 2024, from https://mepc.org/commentary/israel-able-eliminate-hamas 

Monday October 16, 2023 Full Transcript. (2023, October 16). CBC. Retrieved March 26, 2024, from https://www.cbc.ca/radio/thecurrent/monday-october-16-2023-full-transcript-1.6998168 

New Rift between Biden and Netanyahu

Julian Borger, reporting in the Guardian, suggests that the US abstention from the March 25, 2024, resolution of the UN Security Council proposing a ceasefire for Ramadan, release of hostages, and increased aid to Gaza marks a rift with the Netanyahu government. A post on  March 19, 2024, Writing on the Wall around Gaza, identified concerns about international humanitarian law particularity in the concepts of discrimination and proportionality in the plans of Israel to go ahead with an attack on Rafah.

Increased Separation

The US abstention marks a rift with the Netanyahu government, reflecting mounting frustration in Washington at the prime minister’s defiant insistence Israeli forces will go ahead with the Rafah attack, and at continued Israeli hindrance of humanitarian aid deliveries.

While the resolution demands a temporary ceasefire during the remainder of the Muslim holy month of Ramadan, it adds that it should lead to a “lasting sustainable ceasefire”. In a late amendment demanded by the US, the word “lasting” was substituted for “permanent”, to Russian objections. A Russian effort to restore the word “permanent” was defeated by 11 votes to three.

At the last minute on Monday morning, the US asked for an amendment adding a condemnation of Hamas for its attack on Israel on 7 October leading to urgent huddles of diplomats on the chamber floor, but dropped that demand when it became clear the amendment would be resisted. (Borger, n.d.)

The UN secretary general, António Guterres, has called on the resolution demanding an immediate ceasefire in Gaza to be implemented, adding that “failure would be unforgivable”.

A social media post by Guterres reads:

The Security Council just approved a long-awaited resolution on Gaza, demanding an immediate ceasefire, and the immediate and unconditional release of all hostages. This resolution must be implemented. Failure would be unforgivable. (Israel-Gaza Live: UN Security Council Passes Resolution Calling for Immediate Ceasefire, as US Abstains, n.d.)

The resolution of the UN Security Council sets a challenge for Israel to continue to be aligned with conscientious action to move toward peace and the protection of civilian lives in Gaza.

References

Borger, J. (n.d.). Israel-Gaza live: UN security council passes resolution calling for immediate ceasefire, as US abstains. the Guardian Live. Retrieved March 25, 2024, from https://www.theguardian.com/world/live/2024/mar/25/israel-gaza-live-unrwa-aid-north-gaza-un-security-council-vote-ceasefire-middle-east-latest#top-of-blog 

Israel-Gaza live: UN security council passes resolution calling for immediate ceasefire, as US abstains. (n.d.). the Guardian Live. Retrieved March 25, 2024, from https://www.theguardian.com/world/live/2024/mar/25/israel-gaza-live-unrwa-aid-north-gaza-un-security-council-vote-ceasefire-middle-east-latest#top-of-blog 

Humanitarian Law and Severe Food Insecurity in Gaza

A fundamental objective of International Humanitarian Law is to reduce the death and suffering of civilian populations in the midst of war. In Gaza, Hussein Ibish, Arab Gulf States Institute, defines Hamas as a millenarian group, apocalyptic, believing a divine mandate with a religious imperative. Israel is understood to be a modern democracy with a rules based system of justice. Respect for International Humanitarian Law is expected of Israel and not a realistic expectation for Hamas.

Damage in Gaza

Jason Burke, in Jerusalem, writing for the Guardian, reports the finding of ‘utter annihilation’ in travel by a UNICEF representative in Gaza.

James Elder, a spokesperson with the United Nations Children’s Fund (Unicef), described the prospect of an attack into Rafah as “terrifying”.

“A military offensive in Rafah would be utterly catastrophic. The last remaining water points and hospitals [in Gaza] are there and there is nowhere else to go. Khan Younis, Gaza City barely exist any more,” he said. “Rafah is Gaza’s last hope and it is utterly bewildering that a conversation on a potential military operation is still continuing.” (Burke, n.d.)

On March 22,2024, the US secretary of state, Antony Blinken, met the Israeli prime minister, Benjamin Netanyahu, for talks aimed at ensuring more aid gets into Gaza, amid increasingly tense relations between the two allies over the war.

“One hundred per cent of the population of Gaza is experiencing severe levels of acute food insecurity. We cannot, we must not allow that to continue,” Blinken told a news conference late on Thursday March 2, 2024. (Burke, n.d.)

Blinken is also expected to discuss Israel’s intention to launch a ground offensive on Rafah, where more than half of the population of Gaza is sheltering in makeshift accommodation.

Netanyahu has repeatedly vowed to launch an attack into the city, which he says is the final stronghold of Hamas. The US president, Joe Biden, has said this would cross a “red line” for the US.

The war was triggered by a surprise attack into southern Israel by Hamas militants who killed 1,200 people and took about 250 hostages, mostly civilians. More than 32,000 Palestinians have been killed in the subsequent Israeli bombardments, mostly civilians, Gaza health authorities say. (Burke, n.d.)

 

Julian Borger in Washington, Lisa O'Carroll in Brussels and Peter Beaumont in London report, for the Guardian, that EU leaders call for ‘immediate humanitarian pause’ while the US is expected to bring a UN resolution calling for truce without delay.

The Biden administration has argued that an unconditional ceasefire would undermine leverage on Hamas to release its captives, seized during its 7 October attack on Israel, in which hundreds of civilians were killed. If the hostage talks in Doha fail however, the Biden administration will be faced with a dilemma: whether to continue to insist on the linkage between hostages and a ceasefire in the face of a clear warning this week from a UN panel of experts that a catastrophic famine in Gaza is imminent. At the UN, the French envoy, Nicolas de Rivière, said: “It’s time to save lives.”

“The death toll is around 32,000 men and women. It needs to stop now. This is why I will encourage the security council to take action before the end of the week, before the weekend,” de Rivière said. “Each time there is a crisis in the world, the first thing the security council is asking for a ceasefire, and then talks. This is what we have to do on Gaza as well. There should not be an exception.” 

The new text sends Israel the clearest message yet of the Biden administration’s growing frustration with its prosecution of the war, and comes after a warning from the UN human rights chief, Volker Türk, that Israel may be committing a war crime by using “starvation as a method of war”. (Borger et al., n.d.)

UN experts and agencies are increasingly concerned that there will be severe famine in Gaza as a consequence of the rejection by the Israeli prime minister, Benjamin Netanyahu, of efforts by the US, EU, and UN to create ceasefire conditions that will save civilian lives from death by starvation.

References

Borger, J., O'Carroll, L., & Beaumont, P. (n.d.). EU and US pile on pressure for Gaza ceasefire. the Guardian. Retrieved March 23, 2024, from https://www.theguardian.com/world/2024/mar/21/eu-and-us-pile-on-pressure-for-gaza-ceasefire 

Burke, J. (n.d.). Unicef official tells of ‘utter annihilation’ after travelling length of Gaza. the Guardian. Retrieved March 23, 2024, from https://www.theguardian.com/world/2024/mar/22/unicef-official-utter-annihilation-gaza 

Carbon Tax and Household Rebate (CAIP)

Taxes are a challenge to defend even in a country where the benefits of our health, education, and social services have created healthy, smart, and contributing residents who make our nation one of the most desirable in the world. 

Carbon Tax Take A Way

Tony Keller, editorial writer for the Globe and Mail and 2016 National Newspaper Award winner, observes that we have met the enemy of the carbon tax, and it is us.

If the carbon tax were axed, the funding for carbon rebates would disappear, and most Canadians would end up with less money in their pockets, not more. I pointed that out last year, and in the past week it has become the Trudeau government’s key talking point. It has the virtue of being true.

The slogan is short and punchy: “Axe the Tax.”

The words have an obvious appeal for many Canadians: The carbon tax raises prices, so scrapping it would lower prices – and leave people with more money in their pockets.

Right?

That’s the theory behind Conservative Leader Pierre Poilievre’s plan to “bring home lower prices and powerful paycheques” by taking a hatchet to the carbon levy. The claim that axing the carbon tax will leave Canadians financially better off could be a political winner for Mr. Poilievre.

It has just one small defect. It’s not true. (Keller, n.d.)

Tony Keller notes that alternatives to the carbon tax would do the opposite of putting money in people’s pockets.

Take Quebec’s cap-and-trade carbon pricing system. Opacity is its political superpower. Most Quebeckers don’t know that they’re paying, and the money stays in provincial coffers instead of being rebated. A little ignorance buys a lot of political bliss. The cost of cap-and-trade has been a non-issue in Quebec politics.

Or take U.S. President Joe Biden’s Inflation Reduction Act. It has all kinds of programs to reduce emissions, without a consumer carbon tax. How do you get what looks like all benefits and no costs? Run a bigger deficit.

Between 2020 and 2039, Ontario plans to spend $118.1-billion on electricity subsidies, according to the province’s Fiscal Accountability Office. In 2022-2023 alone, Ontario spent $6.8-billion lowering the price of electricity below its cost. How did Premier Doug Ford’s government pay for that? With a budget deficit. Absent the subsidies, Ontario would have run a surplus. (Keller, n.d.)

Trevor Tombe, economics professor and Jennifer Winter, economics and public policy professor at the University of Calgary write that in fact, Canada’s carbon pricing rebates ease affordability pressures for most households. This article was originally published by Policy Options.

High-income households stand to gain the most if the tax were axed. 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.

Liberal government points to the part of the PBO report that features straight fiscal math — how much average households pay minus how much they get back in rebates.

Conservatives point to a part of the PBO 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.

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," (Tombe & Winter, 2024)

Larry Hughes, professor in the Department of Electrical and Computer Engineering at Dalhousie University, offers a commentary on Carbon pricing in Atlantic Canada in the Halifax Examiner.

To understand the impact of removing the carbon tax on heating oil, we examined three building types and sizes of home in each province in Atlantic Canada. The building types and sizes, and the number of people living in them (the household size) are:

• Apartment 1,000 ft2 Two persons

• Single-detached 1,500 ft2 Three persons

• Single-attached 2,000 ft2 Four persons

The total carbon tax is calculated using the value of the household’s rebate (CAIP), determined from the number of occupants and using the provincial data. The “balance” is the difference between the household’s CAIP and its total carbon tax.

Balance in Nova Scotia under different tax plans

When the heating oil tax is included, the hypothetical households in Nova Scotia (Figure 5) have a negative balance. With the tax removed, the households all have balances over $300. (Hughes, n.d.)

Nova Scotia Balance with and without heating oil tax

Robson Fletcher of CBC News reports on the analysis of Canadian carbon tax done by  University of Calgary economist Trevor Tombe. He extracted data from the latest version of the SPSD/M, specialized software created and maintained by Statistics Canada, and shared it with CBC News to illustrate how a hypothetical axing of the federal carbon tax would affect different households.

As it stands, there is some minor variation from province to province, but Tombe says the general trend is the same: "A clear majority of households do receive rebates that are larger than the carbon taxes they pay for."

One thing that sets households apart, however, is their income level.

"If we got rid of the carbon tax and the rebate," Tombe said, "then this would harm a much larger fraction of lower- and middle-income households than it would higher-income households." (Fletcher, 2023)

The professional analysis of the effect of taxes done by award winning journalists, and Canadian professors of economics and engineering need to be given significant weight in our assessment of political claims especially in the advent of a federal election.

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 

Hughes, L. (n.d.). Carbon Pricing in Atlantic Canada. Wikipedia. Retrieved March 22, 2024, from https://www.halifaxexaminer.ca/commentary/carbon-pricing-in-atlantic-canada/ 

Keller, T. (n.d.). We have met the enemy of the carbon tax, and it is us. Globe and Mail. Retrieved March 22, 2024, from https://www.theglobeandmail.com/business/commentary/article-we-have-met-the-enemy-of-the-carbon-tax-and-it-is-us/?login=true 

Tombe, T., & Winter, J. (2024, January 1). Don’t Blame Carbon Pricing for Affordability Challenges. The Tyee. Retrieved March 22, 2024, from https://thetyee.ca/Analysis/2024/01/01/Carbon-Pricing-Affordability/