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Break out the bubbly. The Quebec government’s decision last week to honour Kyoto guidelines through a carbon tax has brought a taste of green Europe to our borders. It has also thrown a major challenge to Dalton McGuinty, recent recipient of a slew of environmentalist darts.
With Quebec’s bold move, we may now suffer a little less from a particularly noxious form of tax-free atmospheric pollution: lectures from politicians and business pundits insisting a tax on business smoking will stunt economic growth.
It’s a first that the government of a have-not region in North America – la belle province, like most of the world, has no natural gas, no oil, no coal and no auto industry to speak of – has decided to break from the economic mantra of regions that do have gas, oil, coal and car plants.
In other ways, Quebec, of course, is very much a have region. It is blessed with hydro and wind power that can produce clean energy exports, rich in fisheries, forests, farms, cuisine, culture, wilderness and beautiful scenery. Like most of the world, its economy will flourish when it breaks the hammer lock of carbon-obsessed policies.
As soon as carbon taxes get reframed as “green protectionism” – as an economic, not enviro tax, as a tax that values local resources and protects local jobs against carbon-subsidized imports – we’ll start to see Quebec imitators among the New Yorks, Massachusettses, Manitobas, British Columbias and Oregons of the world.
Here’s the dope on this transformative tax.
What: A government charges companies, usually about $30 a tonne, to clean up garbage they put in the air, the same way governments charge people to clean up trash they leave on the sidewalk.
When: The government taxes producers or importers of coal, gas or oil – easy and quick to identify and find, thanks to the highly monopolized nature of the sector – when the resource is ready to be sold. A company is free to pass on the cost of the tax to its customers (and risk losing them to competitors who sell cleaner fuels) or to become more efficient and reduce its carbon emissions.
How: To qualify as an environmental carbon tax, the revenues must be recycled, either to fund “offsets” (planting trees that store the carbon released into the air by fossil fuels, for example) or to fund alternatives (providing free transit passes to low-income earners, for instance.)
Opponents of the tax like to complain that it will unduly punish low-income carbon users, but let’s do a reality check. The fact is, carbon users have been freeloading on other taxpayers, especially low-income non-users, for the better part of a century.
By and large, the tax code and other instruments of government policy have long followed three basic rules: the dirtier the fuel, the lower the tax the more harm done to the innocent public, the more costs are borne by the innocent public and the more local jobs destroyed, the lower the tax.
Here are some examples from everyday life, obvious as soon as you start to think about them (which may explain why so much effort has been put into keeping you from doing so). Drivers think they’re doing their public duty when they pay their gas tax to the senior levels of government that provide drivers with highways.
They don’t stop to think that cars spend most of their time on city roads that are paved, repaired, ploughed, cleaned and policed by municipalities with taxes collected from city property owners, a third of whom are too old, too young or too poor to have a car on the roads they pay to keep up.
All taxpayers also pay for the fact that a third of all city space is consumed by black asphalt, which turns cities into heat magnets during the summer, driving up everyone’s cost for air conditioning. All these roads also drive up everyone’s costs for storm sewers, since rainwater can’t percolate through the pavement.
It’s easy to see the problem when you compare taxes paid by consumers at the service station for gas, a relatively clean fuel, to the taxes paid at the supermarket on the relatively dirty fuel used by diesel trucks to bring in cheap food from across the continent, to the taxes paid on utility bills for electricity from a relatively filthy fuel, coal.
Since food and electricity are considered necessities, the price of which must be kept low for rich and poor alike, consumers pay less tax for the filthier and more prolific carbon emitters.
A carbon tax is a long-overdue attempt to bring the social and enviro costs imposed by fuel users more in line with the real costs of their habit. The record shows that speaking the truth to markets clears the air and boosts economic efficiency at the same time. The most powerful info on this comes from a British green business organization, the Climate Group, which issues an annual report called Carbon Down, Profits Up. It is proof that good corporate karma flows from sound corporate carbon reduction.
The latest report, relying on stats up to 2005, features 74 companies that saved $11.6 billion in a year, 34 cities that saved $745 million and 16 regional governments, including California, which slashed $20 billion (all figures U.S.) from expenses by cutting back on what accountants call waste and environmentalists call greenhouse gas emissions.
A carbon tax can shake the money tree by speeding up the rate at which organizations take notice of the cost of their waste discharges and start to improve their resource management.
Environmentalist prophets of doom and business oracles for profits have been working away in parallel universes thanks to some of the quirky realities of organizational development. This fact whacked me on the head when my wife told me about a two-day course she took on management and leadership styles. The course was based on the “situational leadership” ideas of Ken Blanchard, of One-Minute Manager fame.
Phase 1 is a time for forming, when leaders of a new trend tell anyone who’s listening that things have to change: think enviro movement, 1965-90. With phase 2 comes storming, when there’s retaliation from people who don’t want to change: think oil industry neo-conservatism and clashes with enviros, 1990-2006.
Phase 3 brings norming (creating norms people respond to without strong directives), as the world decides the time has come for action and that the stormers should stand aside.
We are now entering that phase – hopefully not too late or too slow.
news@nowtoronto.com
