Canada’s Liberal party has launched the centerpiece of its platform in anticipation of the next election: a carbon tax. The plan to tax heavy carbon-producing energy industries includes a reduction in taxes on individuals and households in other areas, and is described in the so-called “Green Shift” plan.
Here is an outline of the plan from the party website — http://thegreenshift.ca/default_e.aspx — established to present it:
The time has come to do what is right — not what is easy — for our environment and for our future.
That is why the Liberal Party of Canada has introduced the Green Shift, a bold plan that will cut income taxes, put a price on pollution, fight poverty and position Canada to be a leader in the 21st century global economy.
Our plan is as powerful as it is simple. We will cut taxes on those things we all want more of such as income, investment and innovation, and we will shift those taxes to what we all want less of: pollution, greenhouse gas emissions and waste.
Energy costs are soaring all over the world. While energy prices continue to rise, we need to encourage energy efficiency. We need to change wasteful habits. We need to discourage polluting activities.
But an economic slow-down is also threatening Canada — too many jobs are disappearing. So we need to create new, well-paying, green jobs.
We also need a fairer and more progressive tax system so that we help all Canadians become part of the solution to the climate change crisis while protecting lower- and middle-income Canadians and more vulnerable Canadians — seniors, the disabled, etc. — from rising energy costs.
Over four years, the length of a government’s usual mandate, we will put an increasing price on the greenhouse gas emissions associated with fossil fuels, like coal and natural gas. This greenhouse gas pollution is what traps heat in our atmosphere and causes climate change.
Higher energy costs will be off-set by tax cuts. We will dramatically reduce other taxes, for individuals and for businesses. We will make sure that this dramatic tax shift is revenue neutral.
It cannot be, and we commit that it will not become, a tax grab by government. This commitment will be enshrined in legislation, and we will have the Auditor General look at the numbers and confirm this each and every year to Canadians.
But putting money back in the hands of Canadians is only part of the solution. Investing in renewable energy and conservation — helping families to use less and pay less — is also key to our plan. As part of our broader climate change plan, Canadians will have access to a full suite of programs to help them reduce their own carbon footprint and the pollution they produce.
This will allow Canadians to save even more money on their own energy costs, while helping to reduce greenhouse gas emissions and other pollution.
Our plan includes many other tax measures that will ensure no one gets left behind — specific measures for low-income earners, for families, for rural and Northern residents.
By the fourth year of our plan, we expect that a family with two children and a combined income of $20,000 will save almost $2,500; a family with two children earning $40,000 a year will save nearly $2,000; a family with two children earning $60,000 will save over $1,300, as will a family earning $80,000.
To attract investment and create jobs, our plan will also see corporations having their tax rates cut so they can invest more money in reducing their own pollution and increasing their energy efficiency.
In the coming weeks and months, Liberals will be criss-crossing the country holding discussions on our plan.
Read the Green Shift today and join our growing coalition — a coalition that crosses party lines and will move us beyond outdated notions of what it means to be right- or left-wing.
A coalition that will cross generational divides, as older generations work to leave to their children a better planet than they inherited, and younger generations unleash their passion and innovation against the challenge of climate change.
On the same day the Liberals announced their plan, a supportive news release was issued by “Sustainable Prosperity” which describes itself as “a major new policy research initiative.” This group writes:
Sustainable Prosperity welcomes today’s proposal by the Liberal Party of Canada for a tax shift that cuts corporate and income taxes and implements a tax on carbon. The proposed approach is an important advance in the policy debate about reducing Greenhouse Gas (GHG) emissions, and ultimately moving Canada towards an economy based on sustainable use of the environment — one that is well positioned to compete in the global, greener economy of the future.
To achieve significant cuts in GHGs, it is essential to put a price on carbon emissions. A wide array of experts has identified a tax shift as an effective way to do so.
The Liberals’ proposal is very similar to the approach taken by the B.C. government earlier this year, and also adopts ideas advanced in a discussion paper released by Sustainable Prosperity in March (by Professors Jack Mintz and Nancy Olewiler). We are encouraged that a portion of the revenues raised through this proposal will be channeled into tax credits to support cleaner technologies and new green jobs. And to counteract the cost impacts from a rise in pollution prices, we welcome the proposal to recycle the bulk of the tax revenues back into income tax cuts – including the additional relief for low income Canadians and vulnerable regions.
This announcement follows a number of other programs that have implemented new pricing signals such as Quebec’s carbon levy, BC’s carbon tax and Alberta’s Technology Fund, as well as the federal government’s proposed emissions trading program (including its Technology Fund and offsets system), It is important to note that these different approaches can work hand in hand, as has been seen in several European countries. Emission trading systems can be combined with broadly-based environmental taxes in order to put a price on carbon across the whole economy.
What we need now is a thoughtful public conversation about the implementation challenges raised by all of these approaches. Complex issues remain such as federal-provincial implications, competitiveness of exports and equity considerations. These issues are surmountable but Canadians must consider them carefully to get them right. Sustainable Prosperity has published an initial assessment of these issues in a working paper entitled “Key Issues in Carbon Pricing Policy” which can be downloaded at our website: www.sustainableprosperity.ca
Putting a price on environmental outcomes is a step towards the larger goal of shifting Canada towards a greener, more vibrant economy – one that will provide both environmental sustainability and long-term prosperity. This may be the major challenge of our time. We must begin by lowering the cost of things we want to encourage employment, innovation and investment and raising the cost of things we want to discourage pollution, waste and carbon emissions.
Sustainable Prosperity is a new research and policy initiative that aims to build a greener, more prosperous economy for Canada. SP brings together prominent academics with leaders from business, NGO, government and communications to develop market-based approaches that promote environmental and economic health. See www.sustainableprosperity.ca
For more information, contact Sustainable Prosperity’s Executive Director, Jane McDonald at 613-218-9118.