There’s no compelling case for implementation of carbon taxes

Last month, a pair of headlines questioned how conservatives could possibly oppose a carbon tax.

One column, by political scientist Jim Farney, ran in the Red Deer Advocate and asked is there a conservative case against the carbon tax. Not really, he concluded.

Then it was economist Christopher Ragan, whose column in the Globe and Mail was titled: If you’re a Conservative who opposes carbon pricing, are you really a conservative?

Ragan, the McGill University professor who heads up the environmental think-tank Ecofiscal Commission, did carve out an important exception: conservatives could reasonably oppose carbon taxes if they don’t believe climate change to be a serious problem. But otherwise, he wrote, principled conservatives must line up behind a carbon tax.

However, the conservative case for carbon taxes has a significant problem. For the same reason that a carbon tax is preferable to emissions regulations, conservatives should favour a do-nothing approach from government over a carbon tax.

(Importantly, this doesn’t mean inaction on climate change, it just means that the action should be taken by private individuals, not the government.)

The conservative case for carbon taxes is that a tax allows more flexibility to the market as to how best reduce emissions and by how much.

A government regulation approach is more costly because politicians are likely to prescribe poor solutions out of ignorance, or out of self-interest that benefits only politicians and rent-seekers, or some combination of the two.

The problem is that a carbon tax also relies on the good judgment of politicians. Ragan has called for a “well-designed” carbon tax, but given politicians’ failed policies on even the simplest issues, what reason is there to suppose that they, conservative or otherwise, could properly design a carbon tax policy?

A well-designed policy, according to Ragan, would need to address the fact that a carbon tax would encourage many businesses in carbon-intensive industries to relocate to the United States — something that might be mitigated, he said, through “temporary support to these vulnerable sectors” and “incentives to reduce emissions without reducing employment.”

This seems fine, except that “temporary support” and “incentives” sound like a corporate welfare racket. Designing such a scheme would rely heavily on the discretion of politicians as to what industries should be supported, how and for how long.

Ironically, the inefficiencies of corporate welfare and the perils of relying on government discretion are the main arguments used in trying to convince conservatives to embrace carbon taxes.

Indeed, even most proposals from self-described conservative carbon taxers would do more harm than good. Some have suggested simply refunding carbon tax revenues by sending rebate cheques to households. But this would reduce Canadians’ incomes, since carbon taxes discourage productive economic activity, while rebate cheques do nothing to counteract this negative effect.

Using carbon tax revenues to cut income taxes is a much better idea. But the often-repeated line of carbon taxers, that it’s better to tax carbon emissions than income (since emissions are bad and income is good), is misleading.

Economic activity relies on fossil fuels, so a carbon tax also targets income. But a carbon tax, by targeting industries unevenly, is likely to have a larger negative effect on income than an income tax.

This is why — even supposing that climate change will pose a serious problem — a government do-nothing approach beats a carbon tax. A government do-nothing approach doesn’t mean taking no action; it just means that it’s not the government that’s taking the action.

Relatively free societies have an excellent record of solving difficult challenges and flourishing in changing circumstances without governments leading the charge.

In the end, the question is whether a carbon tax would do more harm than good. The tax could accomplish some environmental benefit in the form of reduced emissions, but at what cost?

Given politicians’ propensity to screw up, something all conservatives should be well aware of, the cost of carbon taxes is likely too high to justify its implementation.

Matthew Lau is a writer with the Atlantic Institute for Market Studies.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta children whose only symptom of COVID-19 is a runny nose or a sore throat will no longer require mandatory isolation, starting Monday.
477 new COVID-19 cases confirmed in Alberta on Thursday

Changes being made to the COVID-19 symptom list for school-age children

Chasetin Morin
Photo from RCMP
Three men accused of assaulting Blackfalds RCMP officer going to trial

RCMP officer shot and wounded one of alleged attackers in December 2019

The Cenovus Energy Inc. logo seen at the company's headquarters in Calgary, Alta., Wednesday, Nov. 15, 2017.THE CANADIAN PRESS/Jeff McIntosh
One-time costs of Husky takeover expected to be about $500 million, says Cenovus CEO

One-time costs of Husky takeover expected to be about $500 million, says Cenovus CEO

This drum circle was one of a multitude of activities held at The Hub on Ross in downtown Red Deer. The facility was permanently closed by the provincial government his week. (Advocate file photo.)
Many Red Deerians react with anger, dismay at closure of The Hub on Ross

Many disabled people can’t afford other recerational options, says guardian

Award-winning Calgary developer Brad Remington stands with Red Deer Mayor Tara Veer at the site of three multi-family condo complexes that are planned for Capstone, west of Carnival Cinemas. (Photo by LANA MICHELIn/Advocate staff).
$36M condo project on its way to Capstone development

Calgary developer plans to create 180 housing units to open in 2022

Alice Kolisnyk, deputy director of the Red Deer Food Bank, says the agency expects an increase in demand as the COVID-19 pandemic continues. Every new subscription to the Red Deer Advocate includes a $50 donation to the food bank. (Photo by BYRON HACKETT/Advocate Staff)
Support the food bank with a subscription to the Red Deer Advocate

The community’s most vulnerable members are always in need of a hand,… Continue reading

Workers at Olymel's Red Deer pork processing plant are among those eligible for a $2-an-hour bonus because of the pandemic.
Red Deer Advocate file photo
Two Olymel workers test positive for COVID-19 in Red Deer

Two workers at Olymel’s pork processing facility in Red Deer have tested… Continue reading

This 2020 electron microscope image made available by the National Institute of Allergy and Infectious Diseases shows a Novel Coronavirus SARS-CoV-2 particle isolated from a patient, in a laboratory in Fort Detrick, Md. Health officials north of Toronto say 46 cases of COVID-19 have now been linked to a large wedding.THE CANADIAN PRESS AP-NIAID/NIH via AP
46 cases of COVID-19 linked to wedding events in Vaughan, Ont., health officials say

46 cases of COVID-19 linked to wedding events in Vaughan, Ont., health officials say

A man walks to the lineup for COVID-19 Assessments at Toronto Western Hospital in Toronto on Tuesday October 27, 2020. THE CANADIAN PRESS/Frank Gunn
Alarm bells ring over COVID-19 and long-term care; Ontario sees slowing virus growth

Alarm bells ring over COVID-19 and long-term care; Ontario sees slowing virus growth

French policemen stand next to Notre Dame church after a knife attack, in Nice, France, Thursday, Oct. 29, 2020. French anti-terrorism prosecutors are investigating a knife attack at a church in the Mediterranean city of Nice that killed two people and injured several others. (AP Photo/Alexis Gilli)
Tunisian carrying Qur’an fatally stabs 3 in French church

Tunisian carrying Qur’an fatally stabs 3 in French church

Director Deepa Mehta is pictured in a Toronto hotel room as she promotes "Beeba Boys" during the 2015 Toronto International Film Festival on Monday, Sept. 14, 2014. Toronto-based director Deepa Mehta's upcoming drama "Funny Boy" is Canada's selection in the 2021 Oscars race for best international feature film. THE CANADIAN PRESS/Chris Young
Deepa Mehta’s ‘Funny Boy’ chosen as Canada’s contender for international film Oscar

Deepa Mehta’s ‘Funny Boy’ chosen as Canada’s contender for international film Oscar

The skeleton of a dog buried in a crouched or sitting position is shown in this undated handout photo. This dog's grave, believed to be 7,000 years old, was one of several dug up by archeologists in Siberia and became part of a genetic study on the history of humans and dogs. Co-author Robert Losey from the University of Alberta in Edmonton says the study provides new insight into how far back the relationship between dogs and humans goes. THE CANADIAN PRESS/HO - University of Alberta, Dr. Robert Losey
‘They came with dogs:’ Genomes show canines, humans share long history

‘They came with dogs:’ Genomes show canines, humans share long history

This microscope image made available by the National Cancer Institute Center for Cancer Research in 2015 shows human colon cancer cells with the nuclei stained red. Sales of medications to treat cancer have nearly tripled in Canada over the past decade, reaching $3.9 billion last year, a report by a federal agency says. THE CANADIAN PRESS/HO, AP, NCI Center for Cancer Research
Cost for cancer-fighting drugs triples in Canada but still no national drug plan

Cost for cancer-fighting drugs triples in Canada but still no national drug plan

Most Read