An update on this.
Last week’s national elections in Canada were bad, but not horrible, news for supporters of carbon tax shifting. And they give me a little comfort about the provincial carbon tax shift already in place.
To review for our American readers, Stephane Dion, leader of the center-left federal Liberal Party (not the same political hue as the provincial Liberals), ran on a platform that included a proposal for a carbon tax shift. His plan was similar in its outlines (but not in all specifics) to that now implemented in British Columbia by Premier Gordon Campbell and his provincial center-right Liberal government. It would have levied a small but rising tax on fossil fuels (with rates on the fuels that varied in proportion to their climate impacts) and returned all the revenue to citizens and businesses through progressive reductions in income taxes. A classic tax shift.
The Liberals lost seats in the federal Parliament, especially in British Columbia, and the tax shift was one of the big issues in the campaign. So, clearly, the carbon tax isn’t as popular as I would have hoped in the province.
My three theories about why:
- Distrust of government. Opinion research in BC shows that many taxpayers do not believe their income tax reductions will compensate them for their carbon tax increases. Plenty of economic research shows they are mistaken, but taxpayers’ distrust of government prevents them from believing it. Worse, opportunistic politicians (such as the provincial New Democrats) can easily play on these fears
- Disbelief in Economics 101. Opinion research I saw in the late nineties from parts of the United States suggested that many citizens do not believe in the economic principle of “price elasticity of demand.” That is, they do not believe that when the price of energy goes up, people use less of it. (Whether the continent’s recent experience with high gas prices changed their minds, I do not know.) So the premise of tax shifting—make bad things more expensive but return the proceeds in economically equitable ways through tax reductions—just does not make sense to them.
- The Asymmetry of Losses and Gains. A bunch of economic and psychological research now shows that people are more averse to losses than they are pleased by gains. The $10 you lose is worth more to you than the $10 you gain. As a consequence, the carbon tax looms much larger in voters’ minds than the income tax rebate.
Back to the politics: Clearly, Dion’s plan didn’t win him any votes. On the other hand, did it lose him any? Or many?
Vancouver Sun analyst Don Cayo doesn’t think so.
I tend to agree. The economic crisis and concerns about leadership styles ultimately decided the election. The carbon tax doesn’t seem to have mattered as much. The outcome of the race mirrored the distribution of the electorate in opinion polls taken before the race began and before Dion announced the carbon tax shift plan.
The left-of-center New Democrats are attacking Gordon Campbell’s provincial carbon tax shift in the provincial elections, too. And polls show the attacks are making some difference. But ultimately, I am hopeful. (Certainly, more hopeful than Tyee commentator Tom Barrett.) Four reasons:
- The carbon tax has been in place now for almost four months and the impacts have been about what you’d expect: not much. It’s a slow-moving policy; that’s one of its key features. Fuel prices have dropped more from market forces in the past four months than the carbon tax raised them. By the time BC holds provincial elections, even more time will have passed. The sky won’t have fallen.
- The federal election’s focus on the carbon tax may have released some of the electorate’s angst.
- Other issues will seem much more important to voters as the economy falls off a cliff.
- The New Democrats’ frontal assault on the carbon tax, while it may have gained them support in some circles (especially rural voters, I understand), has undoubtedly lost them support among environment-minded voters. Many greens will likely peal off to the Liberals or the Green Party. Splitting the left helps Gordon Campbell stay in office, and helps preserve the carbon tax shift as provincial policy.
So the good news is that I read last week’s federal vote tally as an electoral shrug on carbon taxes. Tyee editor David Beers does too. That’s not especially good news, but it’s not awful either. It’s not likely to attract a swarm of enterprising leaders to carbon tax shifting as a way to kickstart political careers. But it won’t completely scare them off, either.
I suppose it’s another of the universe’s unfairnesses, considering tax shifting’s extraordinary merits as public policy. But so it goes. As Winston Churchill said, “Democracy is the worst form of government except for all those others that have been tried.”
Alan Durning
Jeffrey Simpson has a harsher assessment in the G.
Barry
I live in BC. Most environmentalists i know are hopping mad at the NDP for demonizing our carbon tax without offering any real alternative. They offer cap & trade that only covers about half the economy roughly characterized as “industry”. They constantly say “industry” should pay…not consumers. How that works is a hand-waving mystery to everyone. Worse they are spreading the message that even 2 cents per litre of gas is too high a price to pay to stop climate change. Their leader Carole James has openly said “consumers have no alternative” but to buy as much gasoline as they do now. Even a 1.5% reduction to break even after carbon tax is considered impossible by NDP. I really dislike everything the BC Liberals have done except their climate policy. I’ve voted NDP always but won’t any longer because of their disastrous climate policies.So what’s left? It seems the under-reported story of the Canadian federal election was the huge increase in the Green Party vote. In both BC and in Canada as a whole the biggest winner in terms of new voters was the Green Party. Nationally they got more new voters than all the other parties combined…including more than both anti-carbon-tax parties: the Conservatives and the NDP combined. In BC the NDP lost 2% of BC vote share while Green Party got 4% more than last time.All this despite a huge push to “vote strategically” which encouraged Green voters to vote instead for NDP and Liberals.The Green party platform? Very strong supporter of carbon-tax.So i think the voters carbon tax message is very hard to parse in BC. The rabidly anti-carbon-tax NDP lost voters while the very pro-carbon-tax Greens doubled their vote percentage.What i’ve been advocating the NDP do to return to climate reality is to advocate a “carbon floor tax”. This would address their concern that carbon tax was being added to already rocketing gas prices. It would also address the climate reality that a third of BC carbon is from transportation fuels which won’t be covered in NDP proposed cap & trade. It would get all parties working together on a carbon pricing scheme that could be implemented asap while complex cap & trade debates unfold.If NDP continue to oppose carbon taxes on transportation fuels they are going to have trouble with BC’s WCI cap & trade as well. Are they going to follow up “axe the tax” with “scrap the cap”? Hopefully up here in BC we will have carbon sanity emerge with a new version of carbon tax that all parties can agree upon. Otherwise the Greens will continue to gain at the expense of the NDP and the left will continue to split its votes.