Liberal Green Shift, or carbon tax, or whatever you want to call it

You know you are a political junky when you are excited to wake up and begin reading about a new policy being proposed by one of the opposition parties. The Liberal plan might eventually get implemented, but the odds of it happening any time soon are in my view very slim. To implement the entire plan they would almost certainly have to win a majority government in the next election. The Liberals are going to be hard pressed to eek out even a minority victory next election, yet alone a majority victory. Regardless of whether or not the Liberals win the next election, and implement all or part of their Green Shift plan, it is at the very least a good thing that politicians, and hopefully Canadian citizens, will be talking about the pros and cons of a carbon tax. Discussion on the environment (hopefully leading to action) is a good thing for all Canadians.

I have read the Liberal Green Shift Handbook in its entirety. They repeat themselves often throughout the handbook (it could, and should be, much shorter). I do feel that it does an adequate job of explaining what the Green Shift is all about. Much has already been made about their claim that the plan is revenue neutral. Andrew Coyne seems particularly cheesed that they call the plan revenue neutral, when in fact what it does is create substantial tax cuts that amount for about 2/3rds of the new revenue generated, and about a 1/3rd of the new revenue is redistributed through tax credit programs (which can be viewed as spending programs delivered through the tax system). Regardless of whether you want to use the term revenue neutral, the Green Shift does create significant personal income tax cuts, corporate tax cuts, small business tax cuts, and it helps low income Canadians, family with children, and Canadians living in rural and northern areas.

For anyone who is relying on Andrew Coyne’s analysis for their refusal to support the Green Shift idea, they should focus on his conclusion to the plan:

“Conclusion: Lots of Green. Not much Shift. It’s better than nothing, but it’s still very much half a loaf, and a real missed opportunity.”

The Green Shift is certainly not the best plan that could have been created, environmentally, economically, or politically, but as Andrew Coyne grudgingly admits, it is better than nothing. I prefer the imperfect Green Shift plan to the do little to nothing, and do it very slowly approach that is being advocated by the Conservatives.

Coyne also pounces on the mention of a possible carbon tariff in the Green Shift proposal. What Dion said about this on Politics with Don Newman, was that Canada runs the risk of facing trade barriers with California and Europe if we fail to price carbon. Dion is not advocating that we implement a carbon tariff, but is saying that by pricing carbon we avoid possible carbon tariffs from other countries, and at the same time if other countries move towards a carbon tariff then Canada can be a part of the discussion and could benefit from any carbon tariff plan worked out by countries that are pricing carbon. Dion is not advocating carbon tariff protectionism, but is saying that by pricing carbon, Canada will be on the right side of the debate, and the right side of carbon tariff discussions if they arise in places like Europe and California.

Much is also being made of the Liberals going with a carbon tax, rather than a cap and trade system. Dion is not opposed to a cap and trade system, such a system may even be part of a Liberal environmental plan. The Green Shift is not the entire Liberal environmental plan, but is is the centre piece. The Liberals favoured a carbon tax now because it can be implemented quickly and cheaply. A cap and trade system takes a lot of time and money to establish, as well as significant cooperation between Canadian jurisdictions as well as other countries. I think that Canada will eventually participate in a cap and trade system that includes most if not all of the United States (BC, Ontario, and Quebec are all going to a cap and trade system). Commentators, and ordinary Canadian citizens have to remember that the Green Shift is the centre piece of the Liberal environmental platform, but it is not the entire platform. Things like cap and trade, and investment in green technologies is also going to take place, but a carbon tax can be implemented tomorrow, and should have immediate impact on Canada’s green house gas emissions.

I would encourage everyone to have a look at the Green Shift Handbook. Skim it at least, or read the whole thing if you really want to know what the Liberals are proposing. After informing yourself of the actual proposals then go on to read the many commentaries and criticisms that are out there. The Handbook can be found here.