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Proposed Carbon Tax – The Green Shift

With the coming Federal Election, there are a few buzz words going around. One of these buzz words is the Liberal party plan to introduce a carbon tax and have dubbed the plan The Green Shift. This platform has caught my attention in particular because it would provide environment reform in Canada (much needed) along with the potential for a few extra dollars in the tax payer pocket.

What is The Green Shift?

The Green Shift Plan is to introduce additional tax on companies that produce pollution and shift this money to to taxpayers. This plan is meant to be revenue neutral meaning that it’s not a government tax grab.

To be more specific, the Liberals plan on putting a price on Greenhouse emissions at the rate of $10 per tonne for the first year, rising $10 each year until it reaches $40 per tonne. They also claim that government taxes at the pumps will not rise but other fuels will see some increases after the first year.

What Does this Mean to the Tax Payer?

The Good

  • Lowest tax rate will be reduced from 15% to 13.5%.
  • Middle class tax rates reduced from 22% to 21% and 26% to 25%.
  • New universal child tax benefit worth $350/child/year in addition to existing child benefits (what about the existing $1200/child/year UCCB?).
  • Workers making less than $50k/year will receive an extra $250 in tax refunds.
  • Enhanced Working Income Tax Benefit for low income workers.
  • The Disability Tax Credit will be refundable.
  • Lowered corporate and small business rates by 1%.
  • Tax credits for development of green technologies.
  • Increase to the Guaranteed Income Supplement (GIS) by $600/year by year 4.
  • New Guaranteed Family Supplement which will provide a maximum of $1,225 / year for families with children under 18. This will be in addition to the Child Tax Benefit.

The Not So Good

  • Homes that are on heating oil will see increases of up to $16.95/month or $203/year by year 4.
  • Homes using natural gas will see increases of up to $22.16/month or $266/year by year 4.
  • Bad news for truckers, by year 4, diesel costs will increase by $1,700/year.

Real World Tax Savings

Below is a table pulled from The Green Shift handbook which details how much tax savings that you can expect based on your marital/child status.  It seems that a couple with 1 child can expect at least $1,000/year in savings by year 4 of the Liberal plan.  You can also do a specific calculation on their website with their nifty calculator.

Click on the image below to view the full size.

carbon tax the green shift


Personally, I think the Liberals have a decent idea here as Canada is behind in the green times. Not only is this plan environmentally motivated (debatable), it will provide tax cuts for all Canadians. On the other hand, if the Liberals get elected, watch for our Oil companies to pull back which means the the TSX index will be pulled with it.

What do you guys think of The Green Shift plan?

Disclaimer: This post does not represent my political views.

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 55 comments… add one }
  • Brad Dillman September 24, 2008, 9:27 am

    Sounds good to me! But also too good to be true. I have 3 kids and my wife works. That calculator estimated $1,973/yr savings for me. I estimated increased diesel costs (I drive a TDI) at $165/yr at 7 cents hike in the price of diesel. If I add in an increase in the cost of electric heat at 10% (say, $200/yr), I’m still way ahead ($1,608/yr). It doesn’t sound revenue neutral to me, it looks like I’ll have more money – but where will the difference come from if not from the increased fuel taxes? The national debt?

  • FT FrugalTrader September 24, 2008, 9:35 am

    Hi Brad, the revenue comes from the corporations. So the plan is to take from the polluting companies, and distribute the money to the tax payers. There is a tax placed on companies who release CO2 by the ton.

  • Brad Dillman September 24, 2008, 9:43 am

    So how will that affect international competitiveness, say from auto parts mfgrs in Ontario? Don’t get me wrong, I’m pro-shift, but it can’t all be good I expect. So the higher industrial taxes will boost inflation across the board (say, at least due to increased distribution costs). So it might be more accurate to say the green shift is overall revenue neutral, but shifts benefits away from larger polluters (e.g. companies) to smaller polluters (e.g. households). For each entity (company or household) the shift may not be neutral. So indirectly this could have a negative effect on investments for households, but a positive effect in taxes paid on income. Is that bad for the rich, good for the poor (given the rich have more investments)?

  • Mike September 24, 2008, 9:53 am

    The Green Shift fails on several fronts. Most importantly it will not reduce GHG emissions because there is no hard caps. In fact if what the Liberals say is true and everyone gets more money (not sure how that is revenue neutral) then consumption will go up and that in fact will increase GHG emissions. The Liberals also have no way of knowing what the end result for the average tax payer will be. Do you really believe that companies are going to assume the added tax burden without passing on the full increase to consumers? This tax scheme will drive up the cost of EVERYTHING. If the price of diesel fuel goes up that affects the price of everything we buy. How does your stuff get to the store? On a diesel truck. How does your food get harvested? By diesel farm machines. Starting to get the big picture? Anyone with a decent income will suffer under this plan and as FT has pointed out the stock market will dive which just further hurts the middle class.

  • steve September 24, 2008, 10:00 am

    The prices of all polluted goods will also increase, as the companies will be shifting the higher prices of carbon to the consumers. This is probably were the difference above is… so the plan expects that overall expenses (minus direct purchase of fuel) for Brad will increase $1608/yr. The good news is that if you buy environmentally friendly goods (or buy local) then you should be able to cut into that cost significantly. This is the fundamental aspect of the green shift – getting you to be more environmentally responsible by making non polluting goods more attractive in price.

    Of course if everybody makes the “shift” then there will be less income from carbon tax and the income tax credit will shrink – but that is sort of the point.

  • Brad Dillman September 24, 2008, 10:22 am

    The problem I see is international competitiveness. If I have $1,608/yr to handle the inflation due to higher fuel costs for companies, that’s good for me – inside Canada. Consumers in other nations don’t get that tax break – do they? Maybe I don’t understand fully (it is a complex cycle I think).

  • mike h September 24, 2008, 10:31 am

    Let’s be clear – whatever approach is taken to protect the environment and combat climate change will make energy costs in particular more expensive. And this will result in higher prices on other things. And corporations will pass on the costs to the consumers. But putting a price on pollution is absolutely necessary if we want to reduce our emissions. A direct carbon tax is a much more efficient, fair way to do this than cap & trade or hard caps. Bring on the Green Shift!

  • steve September 24, 2008, 10:58 am

    Some things that are revealed deep within the plan include a carbon tariff on imports that have no carbon tax in their country of origin. This will hopefully provide fair pricing within Canada. For our exports, this is an interesting issue – I believe some people are arguing that the longer we go without a carbon tax that it will place a green-stigma on our goods and people will not buy them. This may be true in Europe, but I know that both US presidential candidates are for only cap-and-trade systems so there is certainly cause for concern in the short term.

  • Dividend Growth Investor September 24, 2008, 11:20 am

    This sounds like a good idea. The government will be taking money from the big corporations and distributing them to the middle class and the poor. Just like Robin Hood :-)

  • QTrader September 24, 2008, 11:46 am

    Even the local farmer is a consumer in the economy. If the prices of the goods that use transportation (which is pretty much everything) goes up, so does his cost of living. Do you think the local farmer will not increase the cost of his produce?

    Buying everything local is not an easy option. There is nothing grown in Canada during the winter. All produced is imported from the US, Mexico etc. So, you don’t have a choice unless you decide to change your lifestyle and food habits completely.

    The Liberals may have “noble”(debatable) intentions to save the environment, however, I feel this is a poorly designed plan that will just end up making it difficult for the already “overtaxed” Canadians to make a decent living.

  • Geoff September 24, 2008, 11:51 am

    Just like the GST was supposed to pay down the debt exclusively, so too will this new revenue be reallocated at the whim of some politician.

    Government as Robin Hood sounds nice but in practice it hasn’t really served the general welfare very well. What are they going to do when costs for goods and services go up to meet or exceed the tax savings?

    The free market can do a good job at reducing energy use. Look at what its doing with oil.

    Introducing more Government is only going to raise prices. Then its bye bye tax savings…

  • Brad Dillman September 24, 2008, 12:00 pm

    OTOH, if you increase regulations on industrial polluters, I assume they’ll have to invest capital (in equipment? in buying better feedstock?). Won’t this cost also get passed on as higher prices (inflation), the same as a carbon tax would? The difference being I wouldn’t get a tax break to offset my increased costs. The difference is in ‘shifting’ the costs based on carbon use, rather than only raising taxes or raising regulations (which have associated costs, too). Unfortunately this means shifting some costs to our export economy which disadvantages us vs. nations which do nothing (about carbon). Now, if we could just get most of the world to adopt carbon tariffs against do-nothing nations, we could probably live with that.

    Now for the biased part ;-) Flame on!

    I wonder which party would form a government which would stand up to do-nothing nations (the US for example) and which would not? I expect NAFTA and other FTAs might limit what can be done anyway, so maybe this question isn’t so important after all (at least in the short term).

  • venter September 24, 2008, 12:00 pm

    I think the idea is that by taxing corporations for emissions they will be more inclined to find ways of decreasing output, similarly, increasing taxes on nat. gas and heating oil should prompt people to lower their thermostats, improve insulation etc to save money.

  • nobleea September 24, 2008, 12:22 pm

    This plan hits the province of Alberta the hardest because they produce the most. But Alberta doesn’t use it all – it gets sent all over the country and world. This is the NEP in another name.

    I don’t think this will be revenue neutral as it will slow down the economy. It would probably take off 2%+ off the growth rate and add who knows how much to the inflation rate. Stagflation.

  • Brad Dillman September 24, 2008, 12:32 pm

    To nobleea – the green shift taxes the consumption of carbon – not the production of oil. How would this hit Alberta harder than anyone else? It would it the tar sands specifically, though. I believe they use a lot of natural gas.

  • AndyBuck September 24, 2008, 12:48 pm

    It seems that there are very few people looking at this from the standpoint that something needs to be done.

    Whether or not you believe in climate change, dying polar bears or holes in the ozone, I think that we ALL agree that we need to make this world better and cleaner for our children and their children. That said, it is therefore logical that we must begin to drastically reduce pollution (air, water, ground, etc).

    This has been attempted on a global scale and failed (see Kyoto), so why not begin making some progress as a country? Businesses are not going to change overnight and are not going to change at all without some sort of provocation. If there is no cost to pollute, then they will continue doing so until it is too late (see deadly london smog). Heavy regulation will work, business will cry out that it’s not fair, it will hurt long term profitability, costs will be passed down etc – but who will buy their goods when we’re all sick or dying? A cap and trade system will also work, but will suffer from the same problems – prices will rise, oversight will be costly, businesses will whine about profits, etc. The carbon tax seems like a logical way of allowing consumers in a market system make decisions and see positive benefits (in the form of cash incentives) for making good choices. It’s not perfect, but at least it provides an incentive for consumers to avoid polluting products. Society as a whole needs to change and we require the fortitude to do so not for ourselves, but for our children.

    Why is Canada unable to lead in this respect and show our neighbours what is possible if you think forward? I think we can.

    On an unrelated note: What will we eat during the winter? We have managed to survive for a few centuries up here in Canada without oranges from Florida, or bananas from Peru. Apples can be grown locally and stored for quite some time. Things can be pickled. We can take vitamins. Animals don’t stop growing in the winter – we can certainly eat them. There are plenty of ways to only eat local and still live in the Great White North.

  • Geoff September 24, 2008, 1:26 pm


    Why are you convinced that only government can save us from ourselves?

  • EastCoast September 24, 2008, 1:42 pm

    With the election coming up this is a great stunt for the Liberals to play. It takes money from the corporations, which will negatively affect few voters, as only those at the top of the corporation will feel the hit. And then turns around and gives money to the general public some of who are employees for those corporations and that represents a lot of voters. It comes off as a great environmental stride, but really it’s just a tactic for getting votes.

  • AndyBuck September 24, 2008, 2:20 pm


    I’m convinced that without any firm societal strategy, individuals will only see their own short term gains. By the time that something goes drastically wrong to shift those values, it may be too late to reverse course, and/or the damage may already be done.

    While there may be exceptions to this rule, in general it applies, and that is the role of the government (IMO).

  • OilyGasMiner September 24, 2008, 2:29 pm

    I think the liberals are looking for a key differentiator that sets them a part from the competition, and they’re hit the nail on the head with this “Green Shift”. The table of savings seem very attractive but we need to recall that our economy is so tightly knit that these oil companies can create an even bigger negative impact. With heating oil and natural gas prices said to increase.. will the lower income families really benefit? Or have colder winters? I think we need to thoroughly think this through before making a vote on the issue. We need to know the implications and remember that a change in one area will create multiple changes elsewhere. Good or Bad.

  • The Simple Bachelor September 24, 2008, 2:48 pm

    I agree wholeheartedly with AndyBuck. Something needs to be done now. While the Green Shift plan may not be perfect, and will certainly result in some increased costs to businesses that will be passed on to the consumer, it does begin to build in some of the environmental costs into products and processes that have upun til now been completely ignored. If we don’t pay for them now, our children will pay for them in the future.

  • JJ September 24, 2008, 3:46 pm

    AndyBuck, well said.

    Personally, I am willing to take a hit to my pocket book if it means shifting our economy away from carbon-based energy production. At least with this Plan, I can have some control over my situation, through personal energy conservation, product selection, etc… (things I am already beggining to do). This way, there is some incentive for everyone to go along too.

    I believe that the future lies in non-carbon-based energy production and Canada has an opportunity to take a leading role in this. We can sit around all day and talk (as the politician love to do), but eventually we have to decide to actually take some action. Why can’t that time be now?

    As a side note, although this Plan provides no hard caps for reducing carbon emissions, there is always the possibility of introducing a cap and trade system to complement the carbon tax at a later date. Although this is not part of the Plan, just some food for thought.

    FT, the Green Party also offers a plan for reducing carbon emissions. Perhaps an interesting future article would be a review of this plan and comparison to the Liberal plan.

  • Canadian Dream September 24, 2008, 4:12 pm

    Ah, the Green Shift. Overall a good idea (in theory). The problem is the tax is too low.

    At $40/tonne it simply won’t pay to use Carbon Capture and Sequestation (CCS)technologies for big systems like power plants. The overall cost of those are estimated at $50 to $60/tonne at the lower end. So all the big emitters will just pay the tax and our emissions won’t drop.

    What we really need is a hard cap on CO2 emmissions and a higher tax. Both items would cause the emmissions to go down. I personally like the Green party’s plan. It goes for a $50/tonne carbon tax with a $50/tonne tax credit if you drop your emissions. So it turns into $100/tonne cost avoidance for big business. Now that would turn things green in a hurry!


  • MoneyGrubbingLawyer September 24, 2008, 4:19 pm

    JJ, the plan does indeed call for a cap and trade system, just not right away. Until it is introduced, there will be a system of tax credits to reward those who reduce their emissions.

    I find that there’s a bit of a fundamental problem with a system like this that promises to reduce GHG emissions by taxation and then using the newfound revenue to fund tax cuts and spending programs. If the taxes work as planned and emissions decline, tax revenues will also decline. To make up for this loss, future governments will either have to reverse the tax cuts, decrease program spending, or increase the carbon tax.

    Then there’s the fact that the Liberal platform when taken as a whole shows an almost $11B deficit, which is to be recovered through “reallocation”- in other words, program cuts. Fine by me, just be upfront about what you plan to cut.

    Oh, and FT- the $1,200 UCCB stays under the Liberal plan, so the beer and popcorn budget will be unaffected :).

  • QCash September 24, 2008, 4:34 pm

    Let’s assume the Liberals want to impose a Carbon Tax for the purposes of actually reducing greenhouse gasses.

    Let’s also give them the benefit of the doubt and agree that the shift will be revenue neutral.

    That is –> New Carbon Tax = Income Tax Reductions (in their totality)

    Then, if Carbon emissions are reduced (as per their desire), over time:

    New Carbon Tax generates less and less revenue for the govt


    Taxes have to go back up or spending down.

    Most government taxes are based on increased projections as the economy grows (consumption and income rise, so there is a corresponding growth in govt revenues.)


    a Carbon Tax is designed to punish and therefore coerce a certain type of behaviour. If companies invest in the technology to eliminate or reduce their carbon footprint, they get credits so it becomes a government expense, not a revenue stream.

    I remain a Green Tory, but carbon taxes are not the way to clean the environment or protect the planet.


  • Gates VP September 24, 2008, 4:42 pm

    I think there may be some confusion here:

    The Liberals are seeing both sides of the plan.
    Personal Tax Savings: method by which we provide incentive to voters.

    Increased Costs as a result of the Plan: method by which we intend to actually enforce the change. Of course, corporations will increase their costs to cover the extra taxes. The hope here is that somebody will now be able to provide a lower cost, more fuel-efficient method b/c the barrier to entry is lowered (i.e.: my competitors are fighting the gas tax and I don’t have to).

    I don’t maintain the illusion that the Liberals failed economics 101. I think they’re actively trying to sell the first concept while letting the second concept do the actual work.

    Of course, the big question is, will it work? I guess it really depends what we’re trying to do. AndyBuck has a passionate spiel about pollution and climate change and polar bears. But frankly, I don’t care about the polar bears, I’m not particularly worried about climate change and I don’t see how this bill will reduce pollution.

    It may minimize air pollution, but it’s not stopping the oil sand drillers from making great lakes of sludge. It will force already struggling manufacturers to make more cuts and raise prices, but it may honestly just force them to start shipping work elsewhere. It may help Canadians to “consume less” with increased costs. We may “eat fresher” from local greenhouses (yay 100-mile dieters).

    So it’s honestly a very “Robin Hood” idea and I think that’s very short-sighted. It’s basically an anti-competitive tax on big corporations. At best it will serve to reduce consumption, but I don’t see it solving any of the underlying problems.

    In the stimulus-response model, this tax is basically the equivalent to negative reinforcement. Negative reinforcement doesn’t have a really good track record (see $10 packs of cigarettes).

    Why not take the same tax dollars and provide a pro-competitive solution? Take money from corporations and provide some form of X Prize for drastically reducing emissions. Heck, even let the companies you’re taxing actually compete. Why not use positive reinforcement? Heck a positive solution (rather than a punitive tax), could actually help develop a marketable product and generate GDP rather than generate economic drag.

  • AndyBuck September 24, 2008, 4:51 pm

    Over time the tax should decrease pollution and therefore it’s own revenue. However, it will also start new industries, reduce health care costs and free up resources from costly environmental problems. So, the cost of services may go down, not requiring an increase in taxes. Ultimately, this is all pretty hypothetical because it is near impossible for some industries to completely eliminate carbon emissions.

    QCash, your final statement is a strange juxtaposition. You just finished explaining how when everyone stops polluting there will no longer be a tax base and thus higher taxes, and then you claim that it will not clean the environment. You seem at odds with yourself.

  • AndyBuck September 24, 2008, 5:06 pm


    There is a ‘carrot’ portion of the Green Shift in the form of tax credits. Better credits for R&D, faster amortization on green investments, reductions in corporate and small business taxes and a billion dollar fund for green manufacturing.

    People always look at the tax though. *shrug*

    I don’t really care about polar bears either, but it is time that we begin to take responsibility for what we are doing to the planet so that our children and their children don’t have to inherit all our mistakes. At least we could say that for once, we put the future of the human race ahead of increased profits and growth and tried to make a difference. I’d much rather be able to tell my grandkids that.

  • Tetsuo September 24, 2008, 5:14 pm

    Wow there’s a lot of ignorance in some of these comments, especially on economics which is surprising given the readership of this blog. But I guess once you pick up a blue brush its hard to paint any other colour.

    Markets are only efficient when all costs are internalized. The whole problem with the energy industry today is that significant costs (air pollution, particulate, NOx, tailings ponds, CO2, etc) are NOT internalized, they are externalized. So company A grabs some tar sands and sells oil and we the taxpayer subsidize the water, pay for the increase in health care costs, and pay to combat any climate change issues that arise in the future etc. The point is we’re ALREADY paying for these things, it just doesn’t come in a nice compact itemized bill, it comes from Gov general revenue.

    The entire point of the Green shift is to make one of these costs (CO2) into a nice little bill so everyone knows how much it actually cost to use that resource, ie. internalize the cost. People aren’t good with abstract things, but very good at paying attention to things right in front of their face. Increased costs means people can choose to decrease consumption or select alternative goods. This gives the consumer the power to make an informed decision. The market will take care of the rest.

    @ #27 Gates VP: Read up, $10 cigarettes has had an impact. But you bring up a very good point, increased taxes is a PART of the solution, public information, policy changes, and positive reinforcement techniques like tax credits for new technologies to allow them to get a foothold have to be part of this as well.

  • JJ September 24, 2008, 5:24 pm


    My mistake, I did not realize that a cap and trade system was a component of the Liberal Green Shift Plan. Thank you for pointing this out, as I believe that it is also an important piece of the puzzle for this discussion. Upon searching the Liberal platform, I located the following:

    “We will create a real carbon trading system to reward companies that reduceemissions more quickly to sell their emission credits to those who will take a littlelonger to reduce. This “cap-and-trade” system will harness the power of the market to fight climate change, setting an absolute limit on industrial emissionsand auctioning emission permits, while letting the market decide how best tomake the reductions in a cost-effective way.

    We will ensure this cap-and-trade system will be able to interact with internationaltrading systems, and will be integrated with our other measures so that companies who are covered by the cap-and-trade system are not “double taxed” or treated unfairly.

    This plan will offer business the predictability and clarity they need to make sound investment decisions and plan for the future, and will offer the environmentalcertainty that emissions are reduced.”


    I suppose that this attempts to answer concerns about maintaining Canadian competitiveness with other countries not involved in carbon taxation.

    Does anyone have any data indicating the success/failure of carbon taxation in other countries (ie. Scandanavian countries)?

  • Warren September 24, 2008, 7:32 pm


    Excellent comments. People don’t seem to understand that even now, we aren’t paying the TRUE cost of burning fossil fuels, CNG, etc.

    We only look out for #1. The government needs to use an economic carrot/stick package to help us look out for everybody.

    FYI, I’m already in carbon-tax land (BC). So far I’m getting taxed less than I was thanks to my already green habits.

  • Boyong September 24, 2008, 7:50 pm

    I think we need to look at the source of the problem. Global climate change. The world needs to act in the right direction if we want to make a real impact. Imagine a kayak team rowing in different direction and different rhythm. Canada is admirable in trying to make the “Green shift”. How about the rest of the world? China? US? They are the biggest polluters and yet they are miles away from any “Green shift”. Canada will suffer in the long run if we tax everything that produces C02. Canadian companies will be less competitive. They’ll be forced to move factories to China because they don’t have pollution cap. Workers will be asking for more money because they can’t afford to warm their house in winter. Which then the companies will outsource jobs to India and China. It won’t be far off that one day, I’ll be taxed for the air I’ll exhale because it’s polluting the air. I guess we should all hold our breath at least 1 min per hour to save the planet as well.

  • Simon September 24, 2008, 9:16 pm

    Hey all,

    Just thought I’d throw this quick econ101 link to why a cap-and-trade and a tax policy are be equivalent when cap-and-trade permits are auctionned off.

    Basically, the difference between the two is that when you tax you know how much the prices increases but dont know exactly the effect on the production. When you cap, you know the effect on production, but have no idea how much that will cost.

    Also, keep in mind adding the carbon tax won’t hurt more than removing the 1 percentage point of GST helped.. I know I didn’t notice.

    And no, the TSX won’t dive — much of the oil we produce isnt sold here, so it won’t affect demand that much.

    The linked blog is from an economics teacher from Laval University. I’ve found a lot of interesting posts there.


    This article where Dan Gardner interviewed a very well known Harvard economist about this issue is very interesting :


  • Thankful For Fools September 25, 2008, 1:55 am

    Hey FT,

    I just wanted to thank you for helping clarify some of the carbox tax issues. I have been leaning towards the Conservatives in this current election, but never came to realize that I’ve put no personal time whatsoever into actually researching these carbon tax requirements that the grits have been so kind to bash so openly on every Canadian cable channel.

    Looks like a good thing to me, though. And nothing the conservatives have promised actually means much to me other than the fact that I haven’t seemed to have had a bad couple of years.

    Thankful For Fools

  • Gates VP September 25, 2008, 12:33 pm

    @Tetsuo:@ #27 Gates VP: Read up, $10 cigarettes has had an impact.

    Oh there was definitely an impact, based on the numbers I can find, Canada has under 20% of the population smoking (but over 10%) and the USA looks to be in the 20% range, though the 43M reported here is much less than that.

    So to put this in perspective, packs of cigarettes cost about $3.50 here in Kansas City. They cost $11.00 in say Winnipeg. Tripling the price has successfully stopped maybe 5% of the smokers in Canada. But we don’t know what happens if we dropped that price back down.

    That’s the inherent problem with “the stick”. Don’t get me wrong, I’m sure that the liberal’s plan will have some sort of lasting effect. But I’d much rather go with “the carrot” here.

  • Tetsuo September 25, 2008, 5:17 pm

    I think it would be more pertinent to look at Canada’s historic smoking rate versus now. Yes, its a multivariable system, so that’s why the package of actions the Feds did (advertising, ugly pics, etc) needs to be looked at, but price is by far the largest contributor.

    @#32 Boyong – This is precisely the atitude thats keeps Canada back (and the States!!). “Teacher, I don’t want to to my homework because Billy didn’t have to…” Is that seriously the best excuse out there?? Do nothing because someone else isn’t?

    But let’s look at the falsehood of the reasoning. No, taxing carbon does not make us less competitve. We’re ALREADY paying for it, just not immediately or directly. A simplified example: If a polluting cement plant in BC reduces its output, pollution goes down, health care costs in the nearby town go down, so BC gov’s health care costs go down, which means Fed transfer go down, which means less requirement for revenue and lower income taxes. If it doesn’t reduce pollution, then the carbon tax monies reimburse the Feds for the associated health care costs. Net effect on consumer = zero (averaged of course).

    Now yes, governments have a tendancy not to give back money, so you could view it as “reduced requirement to increase taxes later” versus “reduce taxes now and then increase later” to future spending requirements. Net result in the same.

    By far the best effect of this policy is that it strengthen’s Canadian industry in technologies of the future instead of subsidizing dying technology of the past. The dividends of that are incredible.

  • Zix September 25, 2008, 5:41 pm

    The most ignored part of the entire Greenshift is as QCash pointed out above.

    If the plan is effective in reducing environmental impact than tax revenue from it goes down, and therefore the social programs and tax cuts would have to as well.

    The only way this plan works is if the targets are set so high that they can not be reached and thus the tax revenue can be counted on for a considerable time.

    It’s still a bit of a stretch to call a plan revenue neutral when those that receive the money are not the same as those who paid it out, it might as well be called wealth redistribution.

  • Mr.Archanfel September 26, 2008, 10:02 am

    I think people emphasize too much on the word “green”. To me, this is a shift from income taxation to consumption taxation. Let’s say the plan is to cut income taxes by 50%, but double (or triple) the GST and PST, would you support it? I certainly would, but people who are less frugal probably wouldn’t. To be honest, even if the plan is to tax hybrid vechicles so that we could cut income taxes, I would still support it. :)

  • Jon202 September 26, 2008, 11:12 am

    Okay, so it’s acceptable to tax tobacco products since we know they can kill you but it’s unacceptable to some to tax smog creating pollution and fuels?

    Dion should have called it a pollution tax so the simple minded people would comprehend. Give your head a shake.

    What’s easier to control in your life: How much take home pay you have (ie. your salary) or your fuel-consuming behaviours. Obviously the latter.

  • Gates VP September 26, 2008, 11:46 am

    @Jon: Okay, so it’s acceptable to tax tobacco products since we know they can kill you but it’s unacceptable to some to tax smog creating pollution and fuels?

    Hey Jon, fuel used for transportation is quite heavily taxed. To put this into perspective, when the dollars were at par and Canadians were paying $1.30 L (~$5.05 gallon), people in the US were complaining about the $4 / gallon they were paying. Also, there’s a reason Alberta doesn’t have provincial sales tax.

    I think the bigger issue is whether or not we’re collecting enough taxes from polluting products to fund programs that offset the pollution. The answer is likely no.

  • Jon202 September 26, 2008, 12:13 pm

    Yes, I am very aware of the tax on gasoline. I believe someone in the Green Shift platform it says the tax on fuel already amounts to the carbon tax so it wouldn’t go up. I switched from oil to natural gas to heat my house, I moved closer to my job so I could take the bus so I have little sympathy for those complaining about their commuting costs.

    Imagine how much wealth this country would have if income taxes were low, we were encouraged to save through TFSA and RRSPs and rather than shipping off primary resources to other countries to build stuff, we were a leader in technology and manufacturing of efficient products?

  • $ September 26, 2008, 12:17 pm

    and when everyone cuts back on consuming gas and such, the gov’t loses that tax revenue, so your personal taxes will have to go up. Dumb plan.

  • Jon202 September 26, 2008, 12:25 pm

    That’s such a defeatist argument: Lower taxes mean less revenue. Yet, the traditional conservative/republican answer to spur the economy is to, yes, you got it, CUT TAXES.
    So why cherry pick when it’s “okay” to cut personal taxes? Only when it’s the GST and nobody notices prices go down since retailers increase their prices?

  • Hijinx September 26, 2008, 5:31 pm

    There’s another point that matters to us out west and should matter to the rest of the country – at least to anyone who doesn’t believe in massive wealth transfers.

    The Libs Green Shift is just that – but the green (cash) shifts from Alberta to Ontario and Quebec. Why?

    If the plan is to “tax the polluters” (never mind that CO2 isn’t a pollutant) then the hardest hit by the tax will be the industry in Alberta that provides energy to a good chunk of the country.

    If the balance to that is the lower income taxes to individuals, the biggest benefit goes to Ontario and Quebec – the areas with the biggest population.

    The equation = Tax Alberta and feed Ontario and Quebec. Robin Hood 101.

    The Green Shift is nothing but a massive wealth transfer. It has even been admitted to by the Libs themselves.

    “But at least one Ontario Liberal MP, Ken Boschcoff, has plainly stated that the Green Shift is a way to transfer money out of Alberta into the rest of Canada, with roughly $9 billion of the $15.3 billion collected each year returned to Canadians with annual incomes of less than $40,000.

    Boschcoff called it “the most aggressive anti-poverty program in 40 years. The shift will transfer wealth from rich to poor, from the oil patch to the rest of the country, and from the coffers of big business to the pockets of low-income Canadians.””


    Looks a lot like the NEP, doesn’t it?

  • Jessica September 26, 2008, 7:50 pm

    I think more income tax cut will be required. It needs a 2% cut on all levels of the marginal tax rate. It needs to push the top rate to be “more than $118,285” to “more than $220,000”. Then tax anyone above $220,000 to 32%.

    Also, why also add tax on heating people’s home??? Ummm… This is a necessity for us people. Canada has more cold months than warm months. People are required to heat their homes or they will get sick. I say no increase in tax on heating homes using natural gas.

  • Jessica September 26, 2008, 8:03 pm

    This tax proposal looks good too: https://secure.lexi.net/ctf/petitions.php?petition_id=48

    I like this 2-tier tax rate instead of 4

  • James September 27, 2008, 11:40 pm

    Tax me i’m Canadian seems to be the feeling on this board.

    Something needs to be done? You don’t even know what this will achieve, if anything.

    Fight pollution, not carbon. We’d be dead without it!

    Any complicated tax regime is bound for disaster in my books.

  • Jon202 September 28, 2008, 11:21 pm

    Yea, seriously James – any plan that limits my ability to enjoy carbon monoxide is suicide for the Canadian economy.

    Have a look at the recent fiscal monitor, in case you never do:

    Almost 2/5th of the Canadian Government revenues comes from our hard earned wages – so anything to reduce that gets my vote.

  • Tetsuo September 29, 2008, 5:59 pm

    Hijinx, James, Jessica, thank you for the entertainment. I no longer wonder why Canadians have to work until they’re 80 as they can’t afford to stop working any earlier.

    Not even touching the environmental issues, you’re choosing -> Here Mr. Gov, take my money and do whatever you want with it.

    I’m choosing -> Install a super high efficiency furnace from some Canadian startup and say “Nooo Mr. Gov, you’re not going to get my money today”. And then I’m going to buy stock in said company with my extra cash and watch it grow.

    Again, simplified so others can hopefully understand this time around…

  • Alberta Mortgage Broker September 29, 2008, 6:31 pm

    Hey James and Tetsuo…have you done the math on how long it will take your “super high efficiency home furnaces from some (random) Canadian startup” to pay for itself?

    You might as well buy a bunch of $20 toasters and run around pushing the plunger down. That way you’ll always feel warm (and get some exercise too!) Just don’t exhale, we wouldn’t want your carbon footprint to go up.

    Thanks for simplifying my post for me. Unlike your apparent view, I assume that the readers of this board can think for themselves and understand simple logic. Don’t you think it’s a bit condescending to decide for everyone else what they can (and can’t) understand?

  • Tetsuo October 2, 2008, 5:54 pm

    Did I calculate the pay back period? Actually, yes, I did. I had a family member who spent ~19k on new windows and a high eff furnace reno. Aside from getting somewhere around 7k back in rebates, their heating bill went from ~250/mo to ~100/mo. I’ll let you do the math on that, wouldn’t want to be “condescending” on you now would I? Increased fuel costs make it even more worthwhile.

    And you missed the fact I was giving a hypothetical example about the future, ie. something better than available today…. and instead took it as a personal attack on “what you can understand” means you totally missed the entire point of the post. The whole point of that last line was to emphasize it was a very simplified example of the future and not to be taken literally, but thanks for trying!

  • Alberta Mortgage Broker October 2, 2008, 6:17 pm

    Hi Tetsuo,

    Apologies if I misconstrued.

    Sticking strictly to the math then:

    If your family members are saving $150 per month that’s very attractive. At the same time, it required them to pay $12,000 (after rebates) up front. It’s not simply good enough to say 12,000 /150 / 12 = 6.67 years (which is how long it would take them to pay back the cost of their renos)…

    …we also have to factor in the opportunity cost of paying $12k up front. Assuming that they had the cash to pay $12k up front and didn’t use a HELOC or some other borrowing instrument at interest rates between 4.75% and 19% or so, they still could have invested that $12,000 and earned a return on it. Let’s say they could have earned a conservative 6.5%. Based on my calculations they would have earned about $5,000 in interest over 6.67 years (roughly). That brings the total TRUE cost of the renos back up to around $17,000. My logic gets a little fuzzy here but that makes the total time to pay off the renos at 9.44 years.

    Someone smarter than me would probably be able to give you a more accurate breakdown of this, but the truth is that the real costs of the renos have to include opportunity cost and cost of borrowing (if they borrowed to do it). Don’t forget depreciation on the furnace (especially if the current one had any usable life left).

    Usually with things like this the marginal utility of doing the reno and “saving the planet” has to make up for the fact that it’s not cost effective to do it. Prius owners buy them ’cause it’s a badge of honour – not because it saves you money.

  • Apply For A Credit Card October 5, 2008, 6:17 am

    This will hopefully provide fair pricing within Canada. For our exports, this is an interesting issue – I believe some people are arguing that the longer we go without a carbon tax that it will place a green-stigma on our goods and people will not buy them.

  • Tetsuo October 6, 2008, 5:08 pm

    AMB, I agree there’s definately an opportunity cost. What finally tipped the decision for them was the extra comfort that the upgrade provide, more uniform temperature in the house. What will tip the scale for a lot more people is the even greater monetary incentive once carbon costs are internalized, which is why I support the Green Shift (and would support any plan with a similar goal). And again, this doesn’t just benefit home owners who upgrade to avoid increased costs [or some other specific example], it benefits all taxpayers as their individual tax burden goes down and they might not have to deal with so much particulate from the coal fired plant down the street [if you’re unlucky enough to live near one of course]

    As for the problem of decreased revenue if the plan is as effective as hoped, this is a false concern. If priced accordingly, then the reduction of emissions reduces a corresponding amount of gov expenses for things such as health care. Do things go out of whack if you live in Windsor and the US does nothing? Short term yes, as you’ll still have to deal with whatever blows across, but long term the US will change and by that time Canada will have a strong technical and experience edge on related technologies allowing us to sell to them insead of vice versa. Time for some value investing, lead the market instead of being led by the market.

    Just my 2cents.

  • john October 11, 2008, 4:36 pm

    i will like for sambury to exsplane with all the oil gas col that wi take out the hurt wath is goin to replace the hole in 100 years the ocen will drap is not the polution that coise problem is the club is liter and is cosing so many probles

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