2008-08-30

Fundamental Flaw in Liberal Carbon Tax Proposal

Climate Change Sucks
Saving the world is hard to argue against, although some do (that would be you Steven Harper). However, pretending to save the world is arguably worse. And that, unfortunately, is what the Liberal carbon tax proposal does.
 
Solution: use less fossil fuels
The solution to global warming is to use less carbon spewing fossil fuels. A carbon tax on carbon fuels seems like a no brainer. Unfortunately, alternatives to fossil fuel based energy (nuclear, solar, wind, wood), under the Liberal proposal, will generally still be more expensive than fossil fuel based energy (oil and coal).
 
Energy elasticity
If alternative energy is still more expensive, the only hopeful benefit of a low carbon tax is that people will use less energy, period. Generally, if things cost more, people buy less of it. However, the Liberals are proposing to reduce income taxes as a result of the carbon tax. So things will cost more, but people will have more money. Count the ways you can spend money that don't use energy... You will hire a maid! Genius. But your maid will buy stuff, she might even have to drive to your house. Face it. The more money you have, the larger your global warming foot print.
 
Non-fossil energy should be cheaper
A carbon tax only makes sense if you tax so high that heating your home with nuclear powered electricity becomes cheaper than using oil. If hydrogen ever becomes feasible for automobile use, we better be sure that the power plants aren't using coal, natural gas or oil! 
 
Liberals to the poor: pay up
The Liberal carbon tax will hurt the poor, who use very little carbon to begin with. They will spend more in taxes and won't be compensated with lower income tax. A higher heating bill when you are on minimum wage doesn't mean switching to solar (unless it is cheaper), it means less fruits and vegetables. And a carbon tax on oil might make the upper middle class think twice about 4 bedroom, two car garage homes. But if they get an income tax break (in part on the backs of the poor) the increase in cost will largely be compensated.
 
The correct way to do it
Tax carbon and subsidize alternatives to carbon spewing energy (including public transportation and Via Rail). An other way to do it, and perhaps the fairest, is  the Ralph bucks way. Tax carbon (a lot) and compensate everybody equally. That way, people who use more than their carbon "quota" would be financially penalised, and people who use less would financially benefit.
 
Some of my previous musings on the subject of global warming and carbon taxes:
 

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